The technical definition of a recession is two consecutive quarters of negative economic growth, as measured by a country’s gross domestic product. But, long before any formal declaration, the average consumer will have already felt the pinch in the old pocketbook.
During a recession, everyone is affected. To what degree depends on how bad the economy gets and also on how prepared you are. Making sure your finances are in order and being proactive in protecting yourself and your family will make a recession a lot easier to deal with. How do you get prepared? Here are few suggestions:
- If you have a secure job, hang on to it. During a depressed economy, consumers spend less, often resulting in layoffs at affected businesses. That next job may not be as easy to find as you think.
- Have an emergency fund to cover necessary expenses for at least three months (some financial consultants say six months).
- Reduce your monthly payments by paying off debt.
- Make a budget and stick to it.