We are currently living in very difficult times, and for many, finances have been impacted by the current outbreak of the coronavirus. Unfortunately, many workers have either been told to work remotely or have been laid off altogether due to the lack of business currently going on. While there are certain difficulties that one has to navigate during the economic recession the country is facing, there are ways that you can circumvent the struggles to ensure you have sufficient funds to take care of yourself. Here are five tips for you to recession-proof your finances if you are working remotely.
Develop Multiple Sources of Income
Working remotely provides you with a great opportunity for you to parlay any talents that you have into the second source of income. While you shouldn’t wait for a catastrophe to hit society to act upon this, working remotely provides you with an excellent opportunity for freelance work. There are plenty of websites that can take advantage of your talents for a fee. During these times, having multiple income streams has become essentially a necessity.
You should take some time to evaluate where your talents lie and what you can potentially do to start earning some money on the side. Whether this is writing, graphic design, video editing or any other skills that you may have, you should be researching who you can be working for. Any little bit that you can earn to supplement your primary income source can change your financial situation. Therefore, while you are working remotely, spend some time on the side exploring this endeavor. There are plenty of valuable resources available at Ladder Advisors if you require more information.
Develop an Emergency Fund
This is something else that you could be working on before tough economic times fall on you. However, there is no greater situation to describe to you the importance of having an emergency fund ready than an economic recession. An emergency fund is not meant to be used on a whim and should only be used for real emergencies. A recession could potentially constitute an emergency because your other sources of income may be compromised as a result.
When you are earning your regular income, you should set aside a portion of those funds into a savings account and do not touch it unless there is no other alternative for you to get your daily necessities. If the ways for you to pay utilities, food or other essentials are heavily compromised, those would be appropriate situations for you to dip into your savings fund.
One of the most important aspects of finding an adequate savings account to invest in is one that has a good and stable interest rate. This ensures that even if you yourself don’t touch the money, the funds that you have in there will gradually grow for you over time. Remember to never touch this money unless you are in a heavily compromised financial situation. You can feel free to consult Ladder Advisors for further expert advice on this topic.
Learn to Invest
Investing is another great way for you to recession-proof your finances during tough economic times. if you are able to master this financial skill, you can exponentially expand your wealth and income. The reason why this is the case is that when you are investing, you are essentially making your money work for you. You have to do your research on which companies you believe will perform in a certain manner. Based on how the company performs, you will reap the benefits by getting an exponential return.
You should understand that it will take some time and patience to adequately master this skill. You may even lose some money in this endeavor because the way a company and the stock market performs is impacted by a variety of variables. These variables can indicate which way a company will trend, and that determines whether or not your return on investment will be more or less than what you invested your money in.
Bearing all of these risks in mind, wisely investing your money can be the escape route you need to build generational wealth and pursue future endeavors such as retirement. Learn how to develop this skill over time to give you another avenue of income.
Avoid Debt
The last thing you want to do during a recession is incur more debt. Every dime that comes into your pocket should be used for your preservation, and you don’t want to be thinking about how you are going to pay a bank or another financial institution. While the government may implement certain interventions to ease the burden, do not take on new debt and avoid unnecessary loans at all costs. Purchases that may require financing such as houses, vehicles or even capital to start a business should be halted until the current economic situation lessens.
You should also recognize that debt prevents you from growing wealth. When you are in debt, you are at the mercy of another entity until they are repaid in full with interest. If you are already in a tough financial spot, why would you want to take out another loan with your name on it? Financing can be important, but if society is currently in a recession, it can be very difficult for you to procure the funds to start paying them back.
As you can see, being in a recession can result in many financial difficulties. However, you should not let that deter you from maximizing your chances of getting more income and stabilizing your finances. Follow all of these tips, and you will be able to put yourself in a better financial spot when the difficult times arrive.
