#22: Tips to Prepare for a Recession

In today's episode we walk through 4 Tips to help prepare you for a recession.  It's really not a fun subject as we have been faced with high inflation, and rising interest rates.
So how do we prepare?  Here are 4 tips ways to ensure your finances are in the best possible position.
1. Get rid of all credit card debt
2. Create a solid savings plan
3. Increase your income
4. Monitor your investments and invest when prices are low

A great way to start is to join our FREE webinar on Jan 17th @ 7pm EST.  Register early as spots will fill up fast!

Join the The Financial Moment community on:
Instagram
Facebook
Website
Email: info@thefinancialmoment.com

Grab this FREE guide with 10 easy tips to keep your budget on track!

Submit guest suggestions HERE

Transcript

#22: Tips to Prepare for a Recession

[00:00:00] 

Do you have resolutions that have fallen by the wayside already and you really want 2023 to be the best version of yourself? We are holding a free webinar that is going to turn those resolutions into milestones. It will be hosted by myself and Amanda Fludd a mindset coach that is going to help us identify negative beliefs surrounding money and give us tools to rewrite.

I will be walking through the smart technique to take your money goals and turn them into a realistic action plan. So are you ready? Head to the financial moment.com/webinar and register As spots are limited. Join a community of people who are like-minded, change makers who are ready to put goals into action.

Hello everyone. My name is Carolyn. Welcome to the saving for your first home podcast. I am the [00:01:00] CEO of the financial moment. We offer money coaching for those who are ready and willing to make financial changes in their lives. For the most of us, there comes a point in time where we think to ourselves, it will be really nice to own property, but it sometimes can feel like a pipe dream, and not very easily obtainable. So I created this podcast to give you all the information and tools you need to take the steps forward toward home ownership. Take it from me, my husband and I started our lives together, working part-time jobs with a young child, fast forward through many hiccups and failures. We stepped our feet into our very first home. 

For us it was a pile of dirt, but eventually our family home was built on that dirt. Now we are in the midst of growing our investment property portfolio. I created the savings for your first home podcast to give you easy, actionable tools for you to do the same. If you have that same gut feeling that I did and want to create a life for [00:02:00] yourself and your growing family, but don't know where to start.

You are in the right place. Let's do this. 

Happy New Year everyone. This is the first podcast for 2023, so I hope you had a wonderful holiday and we're back at it. It's January , and you know, sometimes we feel those. Kind of blues, don't we? You've had, you know, the great time and over the holidays and hanging out with friends and family, and then January comes along and those bills start running in and it's just not so fun,

Anyway, I am here today really to chat with you guys about how we navigate through. These economic times, you know, we all know that the inflation is going up, the interest rates are going up, our day-to-day expenditures are going up, and you know, probably our [00:03:00] income is staying the same. Okay. You know, when I even heard actually that they're starting to see some companies doing layoffs and things like that, so, you know, we're in an interesting time now.

I don't know if they've declawed it, declared a recession or not, but you know, the, the indicators are showing that that may be where we are going. So how do we navigate through this? Our plans are still. Right. So if you have plans to purchase your first home, or you have financial goals, like you want to pay for your kids' education or you have travel plans or whatever it may be, right?

We have our financial plans, but how does the economic times alter that? So, . I was just, I read a couple articles actually over the holidays and I found some of the information fairly interesting, so I thought I'd share. Now this is it. Did you know, did you know that 83% of young [00:04:00] adults between ages 18 to 24 agreed that the financial stability is the key to overall happiness?

Interesting. Eh, 59% also said they're very or extremely engaged with their finance. And 32% of young adults are say, already saving for a house and about a fifth of them are saving retirement. Like what? , I think I, when I was between 18 to 24, I don't even know what retirement meant. , you know, so it's, it's great to see that the young people really.

A keen eye on how to manage their money. Maybe they don't know exactly how to manage it, but they know that it's the key to their future, right. And their overall happiness. So I'm really excited about that. Like, you know, we hear about this doom and gloom, but these kids, they're, they're, they're on point.

 That was really great news to hear. I think that was, See a poll that was published back in October of [00:05:00] 2022, but fantastic results in that survey. Now the other thing that I kind of was looking at is what the trend is for purchasing a home, right? Because we're in an interesting time that prices are still fairly.

right? They haven't come down significantly, but the cost of borrowing is going up quite significantly. So what to do if you're in this space where you wanna buy a home, but it's becoming more and more difficult. So I thought I touched today on how we manage and navigate through these economic times. So I'm gonna go through four different ways that I think you should be focusing on during this time period.

Okay? So the first one, we need to get rid of any credit card debt. This is super important. I can't stress this enough. [00:06:00] Because with interest rates on the rise, that debt can dig in and take away essential cash from your budget. Now, if it's possible, you can seek out 0% credit cards or loans that balances can be transferred to.

Now. That doesn't mean that you clear your card and then you go out and rack up the balance again. Put those cards. Put them in the freezer if you have to make it hard for yourself to spend on credit and make every effort to pay down as fast as possible. This is not only going to free up your cash in your budget, but it will make a positive impact on your credit score, and that's something that is super vital when you're thinking about buying.

So the next thing to do is to ensure that you have a solid savings plan. One of the most important savings funds that you should have is an emergency savings plan. Now, as I mentioned before, we're already seeing [00:07:00] layoffs in major organizations and you wanna be prepared to weather the storm. Any storm that may come your.

Right. So emergency funds, they say should be at least three to six months of your current salary as the baseline. But every situation is different, right? Because not everybody gets paid the same every month, and so you really have to look at your own personal situation and determine. How much you need for an emergency saving fund, but you could use a three to six month as kind of your reference point.

But I know that seems like a lot, but imagine how helpful that's going to be in the event that you do lose your job or that you have less clients. Right, or what options you would have if you had that money and you were laid off, or you, you, you lost your business or something had to happen and you had that money set aside, that would give you options, right?

So that you could plan your next move. So if you don't have one setup, make that your [00:08:00] first priority and put. A percentage away for a rainy day. And lucky for you guys, we are going to be running a savings challenge next month. So if you haven't signed up yet, head to the financial moment.com and register.

It's gonna be so much fun, and perhaps this will be the jump start that you need to create your savings plan. All right? Okay, so number three. You know, it's a good time to make some additional money. The odd thing about this economic time is that their jobs are abundant, right? Side gigs are all the rage, and employers are literally begging for workers.

So if you have a skill, a passion that you can convert into a paying venture, now is the time to explore it, right? So let's start. If you have already of have a full-time job, so if you have a full-time job and you don't want a second, Right. Maybe you can inquire with your employer to see if overtime is possible, [00:09:00] right?

Or you can actually volunteer to complete some hours for another department that's maybe working on a project. So there's kind of ways you can, you can navigate this even through, in your own organization. Check the employment board in your company. Perhaps there is an area that's in need of employees and they're having a hard.

Hiring. You know, maybe you can offer some of your skills to that department temporarily so that you can build some overtime. You know, it might be a possibility. Another way is the side gig, right? This is where you turn your passions into income, and it's a great way to fill your pockets while doing something that you love.

So, for example, if you love to shop, consider being a personal shopper for somebody. With somebody else's money. isn't that great? Or if you love animals find a part-time job at a vet, or you could do some dog walking or dog [00:10:00] sitting. You know, that's, that's always a possibility. Or if you enjoy technology, why don't you offer your services to assist those people that are not as computer savvy?

There are so many. To find your passion and make an income from it. What you can do is you can actually start off by creating a list of all the things you love to do, and then in a separate column, write down some jobs or companies that may match your passions. You know, with a little bit of homework, you might find a good match.

So I would highly recommend that now is the time to try and make a little bit of additional money. And that additional money can be what you use for your emergency fund to fund your financial goals. And all of this can be done on a temporary basis and you, if you're finding it too much, then you stop.

It's just a great way to fund those savings goals without touching your day-to-day. Expi. . Now the next thing to look at is investments. [00:11:00] Now, I just wanna say I'm not a financial planner, so I'm not gonna give you investment advice. However, in this type of market, people are afraid to look at their retirement funds or their investments, and now it's not a good time to close a blind eye.

Talk to your financial planner or your bank to see if your goals are still the same. There are any options to offset any losses that you might be experiencing right now. Your advisor needs to hear your concerns and they should be adjusting your investments according to your needs. And if you don't currently have any investments, as the market takes a dip, investigate them.

You know, if you've done the work and you've put aside the funds dedicated to your long-term goals, Find out what would be the best place to invest and take advantage of the downturn in the markets. So I would say those are my top four things to focus on as we head into these [00:12:00] economic times. So, you know, this is not the first time we've been through this type of economic climate.

My daughter was born in 2005, and during that time it was kind of the beginning of the great recession. The inflation was super high, oil prices were high, and it is similar. Similarities to where we are right now. I remember going on mat leave and my income was a lot less than I would make when I was working.

And so, you know, you're busy being a new mom. My son was about nine at the time, so felt like being a new mom all over again. But we had to find ways to reduce our expenses and make a little more. . So I actually started a clothing brand, , it's kinda hard to believe when you think about it now, but the company name was called the Mini T, [00:13:00] and I made t-shirts for young children, so infants right up to, you know, toddlers.

And I'd have these funny little sings on the t-shirts and my daughter as she got older. Was the model, and that was the beginnings of a new side hustle that I picked up. And it was fun. You know, I got to be creative and put different slogans on the t-shirts and, okay, so now we're talking 2005, right? I created my own website, so I'm not a computer genius.

And back then they didn't have all these fancy tools to develop a website. You had to know HTML code and talk about a psych gig. That took me some time to actually develop the website and then to add a shopping cart. All of those things were definitely not that easy back. . But you know, again, it was like part of me being creative.

It [00:14:00] was a great way to make additional money. And I would go to like the local shows and display my products, you know, on a table and. and it, it was good times. And it's funny cuz my husband always says this, but he remembers that time fondly because he would be my delivery guy. He would go and deliver some of the orders that I would get the bigger orders like from an organization or something.

And. He would have the such great, like the biggest smile on his face when he went out to deliver that order. And it's because it was yours. It's something that you created. It's something that you developed and you turned it into a business. I mean, it was so rewarding. And even now he has. Me like, why did you stop doing it?

And I'm like, well, I gotta go back to work . I think if things were as automated as they are now, I probably still would be doing it. But it just goes to show you that you can really take your [00:15:00] passion and find something that you love to do and turn it into something that's income producing that can fund your savings, it can fund your financial goals and you're having fun at the same time.

So I hope you found this episode. Inform. And if you liked it, please share it with a friend and give us a review on Apple Podcast or Spotify. It really does help us and it helps me to get the message out to more people just like you that are looking to save for their first home. So I'll see you guys next Wednesday, same time, same place.

Thank you for listening. We are committed to helping you place your very first steps into your new home. See you next time.