A recession topic is not if, but when, and according to several economists and finance experts. The warning signs can increasingly be observed nowadays, and no one could really be called capable of knowing the exact time it would happen, but being prepared is definitely one's best defense. With increasing cost, uncertain job markets, and also fluctuating interest rates, securing your future financially is the need of the hour. Here are some basic steps to help you stay on course through a recession and to emerge an even stronger player on the other side:.
1. Organize Your Budget and Eliminate Debt
The first step to securing your finances is creating a budget. Knowing exactly where your money goes each month will give you a clear picture of your financial health. A budget is your life's financial blueprint," Cultivating Wealth founder Sara Stanich explains. "There are oodles of budgeting apps out there, but the important thing is finding a system you're going to enjoy so that it works for you—whether it's envelope budgeting, the 50/30/20 rule, or simple spreadsheet.".
Another thing you need to do is deal with the debt, especially when interest rates are high. Debt could be the biggest consumer of your monthly income, which complicates saving for some kind of emergency needs. The debt snowball might be a good tool. You pay off the smallest debt first, then move on to bigger ones. But if that's too hard, consider taking on a fixed-rate loan for consolidation. This will cut interest payments and put a cap on monthly bills.
And if you are considering high-yield investment opportunities, CREB, or Compound Real Estate Bonds, is certainly unique. But now that solid APY of 8.5% is available for real estate-backed bonds, they certainly are an attractive means of investing savings to grow them safely when economic security is shaky.
2. Build Your Emergency Fund
Recessions tend to coincide with layoffs or lower levels of income-that's why an emergency fund isn't something you can just skip over. It's best to aim for three to six months' worth of living expenses saved, but if you're starting late, you don't need to have a panic attack-well, start with a little money and let that build up. "Think of it as creating a financial cushion for unexpected layoffs or medical expenses," advises Amy Mosher from isolved.
If you are short of money for emergency accounts, you might even consider reducing your contributions to the 401(k) for a period. You want to save for an individual safety net so you will not go to credit or loans when things start going bad.
This fund can be grown in a reliable manner through means such as high-yield savings accounts and Compound Real Estate Bonds, which provide security with competitive interest rates. Ideal for protecting your future, CREB's bonds are backed by real estate with no fees, and withdrawal at any time is allowed.
3. Trim Your Spending Without Sacrificing Comfort
When the economy takes a downturn, it’s time to get creative with your spending. Start by eliminating unnecessary subscriptions, whether it’s a streaming service or a gym membership you rarely use. Simply reviewing your credit card statements for recurring charges can help you save $100 or more each month.
Instead of focusing on small expenses, like your morning coffee, think about the bigger picture. Can you delay a large purchase? Whether it's a second car or a major home renovation, holding off could save you significantly. And when it comes to eating out, dining at home can reduce food expenses. Learning to cook healthy meals can help you cut costs while maintaining your well-being.
4. Smart Investments During a Recession
Many investors feel tempted to sell off their stocks at the first sign of a recession, but this could lock in losses. Historically, some of the best market days follow right after the worst. Dustin Smith of Wealth Enhancement Group advises staying the course. “You don’t want to pull out of the market too soon—you’d have to get both the timing of exit and re-entry perfectly right.”
If you're looking for safer investment options, consider diversifying with bonds, such as those offered by Compound Real Estate Bonds. Unlike stocks, these bonds are real-estate backed, providing more stability with a guaranteed 8.5% return. Not only do you protect your principal, but you can continue to grow your wealth during an economic downturn.
5. Maximize Your Retirement Strategy
For those nearing retirement, making the right financial moves now can help secure a stable future. If possible, consider delaying your retirement until the market stabilizes. Retiring during a recession means you may need to withdraw from your retirement accounts at the worst time, potentially reducing your nest egg significantly.
If postponing retirement isn’t an option, starting Social Security early could help reduce the strain on your investments. However, understand that claiming Social Security benefits early will reduce your monthly payments long-term, so this is a decision that requires careful consideration.
Additionally, low-income years during a recession are ideal for converting traditional retirement accounts into Roth accounts. This allows your savings to grow tax-free, which could pay off in the long run.
6. Side Hustles and Smart Income Streams
Whether you're still in the workforce or retired, finding a side hustle can be a great way to supplement your income during a recession. With the rise of gig economy platforms like Uber, TaskRabbit, and freelance websites, you can create new income streams on your own terms. For those with more time on their hands, this could even mean a significant boost to savings or a way to pay off debt faster.
If you're looking for a truly passive income stream, consider Compound Real Estate Bonds. Their auto-investing feature allows you to set it and forget it, while still earning a high APY—perfect for anyone looking to make their money work for them during turbulent times.
7. Manage Your Housing Costs
For most Americans, housing is the biggest expense. If you’ve been thinking about moving or downsizing, now may not be the best time. With rising mortgage rates, the cost of moving may outweigh the benefits. However, there are other ways to reduce housing expenses, such as getting rid of private mortgage insurance (PMI) or weatherproofing your home to lower utility bills.
8. Focus on Health and Insurance
Finally, don’t overlook the importance of staying healthy—physically and financially. Reassess your health insurance plan during open enrollment to ensure you’re getting the best coverage for your needs. If you have access to a Health Savings Account (HSA) or Flexible Spending Account (FSA), these tools can help you cover medical expenses with pre-tax dollars.
Conclusion: Secure Your Financial Future with CREB
Recessions can be intimidating, but by taking the right steps now, you can protect your financial health. From trimming your budget to investing wisely, preparation is key. And if you’re looking for a smart, low-risk investment during these uncertain times, Compound Real Estate Bonds (CREB) provides the perfect solution. With an 8.5% APY, no fees, and the flexibility to withdraw anytime, CREB can help you grow your wealth and stay financially secure—no matter what the economy brings.
