A recession or any type of market downturn can be a really stressful time. As unemployment rises,
incomes fall, stock markets crashes and bills continue rolling in, it is natural to be worried about your money.
We are going into a global recession
The world is not in recession
Recession in the next quarter or two
On the brink of dare we say it, another recession
Given that economists are predicting a financial
depression following the tidal wave of disaster caused by COVID-19, I wanted to find out how
we can recession proof ourselves.
Rainy day savings is something that's it's always great to have for when disaster happens,
sometimes it's in the form of a pandemic. Other times it's in the form of a broken down
car or major repair that you have to do.
That’s Taylor, Finder’s money specialist talking about the importance of having an
emergency fund. I asked him about how much money we should ideally have in an emergency savings
Well, I mean, it's different for everybody but three to six months of your living expenses is a
good place to start.
There might be a, you know, people that are in the in the situation where they've just
lost a job or that reduced hours or things like that. It's obviously harder to save when
you're not making as much and you still have a lot of the similar bills, but even you know,
putting away a little bit a week that goes to a separate savings
account that's gaining interest.
While you want your savings account to have a high interest rate, the opposite goes for
your credit card. If you are attracting interest or have multiple credit card debts, it might
be time to move them to a card with 0% on balance transfers. You won't pay any interest
for a promotional period and get some breathing room to get your debt under control.
Debt, cash and savings are usually top of mind when we’re talking about recession
but you should be thinking about your superannuation too. Our banking editor Alison explains
what we should do about our super.
The most important thing for anyone to be doing with thier super at the moment
and, and this is actually important all the time, not just you know, with a recession
on our heels, but is to compare and consolidate.
Not only is it just unnecessary having multiple funds, but it's actually really expensive
because those fees will just continue to eat away at your balance that you do have
And by the time your retire, it could be hundreds and thousands of dollars worth of unnecessary fees
As you might’ve seen in recent headlines, the federal government has announced that
some Australians can access their super early to help people who are struggling financially
in the midst of COVID-19. I wanted to find out how this works and if
it’s a good idea to withdraw your super.
If you're in real financial troubles, then maybe accessing some of your super early would
be beneficial to help you you know, pay those ongoing ongoing bills that you need to pay.
But I think that it really should be a last resort for anyone considering this.Because
you're super, it's there to it's there to fund your retirement. And, you know, if you
take some money out now you're basically robbing your future self
Looking at the ups and well mostly downs of the stock market recently, investing is also
a hot topic right now. There are risks and potential returns of investing
during a stock market crash, so we asked our Investments Editor
Is now the time to invest?
Yeah. So I'd go to the point that it's really important right now not to get carried away
with your emotions. Don't get swept up in the hype. Because when there's a really volatile
market like this, it can be easy to you know, sell when the market is dropping and buy when
the market is already high, which means you're locking in your losses, you know, the same
It's really important to have a strategy and stick to it.
And if you want to start dipping your toes, especially in new investments, I'd suggest
starting small, you know, start building your portfolio slowly, don't just put all your
savings into one stock now or, you know, a few stocks now, because we really don't know
what's going to happen with this stock market. We know that every stock market crash rises
eventually, but it could take a long time.
If you have invested in property or are paying off your mortgage of your home, here is what
our Home loans Expert had to say
Well, it's pretty easy. The main tip for anyone who currently has a home loan is to check
the interest rate and see if you can get a lower rate with the different loan and save
a lot of money by getting lower repayments.
Rates have fallen so much in the last year basically. So what was like if you had a 3.50% variable
rate a year ago, that's actually not good. That was good then now it's not great, you
could get 2.5 something and that makes a big difference in your repayments. So look around
and switch to a better cheaper loan
Now, we’ve covered a lot of tips around savings and debt, but what about ways to make more money?
Consider where else you can make the income to sort of help them sell through a potential
recession. I'd start with like looking at where the demand for work is right now.
And on top of that, I would say use that free time to upskill where you can.
There's a lot of digital jobs out there. So for instance, writing, proofreading, design,
video editing, and there are definitely things that you can learn and there's a lot of online
courses that you can sort of use to supplement that.
Right now, it’s really important that we all remain proactive and stay on top of the
news and what’s changing when it comes to our money. There is really no better time
to sort your finances than right now.
These are just some of the things you can do to prepare your finances for a recession.
But if you want to know more about any of these topics, listen to the full version on
our podcast Pocket Money and check out our guide to recession proofing in the description below.
And if have any questions or topics you'd like us to cover, let us know in the comments