Protect yourself against recession by following these simple suggestions
'Recession' is a word you might hear on the news when the economy is suffering. If things get bad enough, banks collapse, people lose their jobs, and some even lose their homes. We're not currently in a recession in the UK, but if we were to be in one again, there are a number of things you can do. From finding out the cheapest car loan rates to opening an emergency savings account, here's what you can do to protect your financial position...
First, open a savings account
During a recession, the threat of redundancy looms over many of us. While it isn't something you should waste your energy worrying about redundancy right now, you should take action to prevent yourself falling on hard times if a recession does make you redundant. If you have any spare money at the end of the month, tuck your surplus cash into a savings account. This will give you something to fall back on.
Diversify your income
No doubt you work really hard at your job, but it's never a good idea to rely on just one source of income. Take on a second job if you're able to, or set up a side business selling or doing something that you're talented at. This way, you'll have money trickling into your bank account from more than one direction, so should recession hit and you lose your primary job, you'll still have a pay cheque to look forward to from another source.
Be smart about taking on new debt
Debt can be tricky to handle at the best of times, so you should use this recession-free time to only take on debt you can manage. If you're thinking of getting a new car on finance at the moment (while we're not in a recession), or are thinking of borrowing money against a vehicle you own, do some research into finding out the cheapest car loan rates. This will enable you to future-proof yourself if the economy suffers by paying only the smallest amount of interest possible, or by committing to monthly repayments that are small enough to handle.
Keep hold of your gold (for now)
Have you ever seen those adverts on TV where they're asking you to sell your unwanted gold for cash? Well, when the economy is favourable, gold does well and can fetch a high price. But, even in a recession, gold is still valuable. The crash of 2008 saw gold perform reasonably well, ending the year with a 5% gain in value. And, many people argue that if the government responds to a recession by printing more money, precious metals become more valuable. So, hold on to any gold jewellery you own for now, but consider selling it if recession hits.
Finally, make sure your savings are safe
Many of us don't have lots of money tucked away in savings, and that's nothing to be embarrassed about. But, if between now and the next recession you do manage to save lots of money, or you inherit a lump sum from a loved one, be careful about where you put it. If the banks collapse, the government only guarantees to repay up to £75,000 per person, as per UK-regulated financial institution. So, if you have more than this in savings, spread your money across multiple banks so that you can claim it all back.