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Recession-Proof Your Finances

Whenever the market endures a sustained dip, the news and pundits begin contemplating the

likelihood of another recession. While a downturn in the market isn’t always indicative of a

recession, we need to get used to the reality that we could see another recession within our

lifetimes.

Ideally, you should be working toward creating a recession-proof financial life during times

when the economy is good. Today, I want to give you five tips to do just that.

1. Live below your means. When you adapt to living below your means, the idea of “living

with less” isn’t as scary. You already understand how to make sacrifices and have taught

yourself how to be disciplined and happy while enjoying a more controlled spending

environment. Even better—you can aggressively fund your savings, which will help you

weather any economic storm.

2. Save, save and save some more. The true key to financial independence is savings. The

more money you have saved, the more financially secure you are and the better able

you’ll be to ride out a catastrophe such as a job loss or recession.

3. Increase your skills. The job market constricts when we’re in a recession, which means

you need more skills to be seen as an appealing candidate to employers. It’s not a good

idea to wait until the recession is in full swing before boosting your skills. Instead, beef

them up now while the economy is good and you aren’t desperately looking for work.

4. Think “repair” instead of “replace.” It’s difficult to recognize how spoiled we become

when the economy is booming. When the economy is doing well, many people don’t

think about repairing appliances and cars that break down, but instead think about

buying new replacements. Train yourself now to focus more on repairing than replacing

and it will come naturally if a recession makes this kind of frugality necessary.

Remember, the more you spend today, the less you save. Don’t be afraid to challenge your own

interpretation of need and rethink your spending habits now, in the good times, so you can get

through the rough times more easily.

About Dennis M. Postema

Dennis M. Postema, RFC, is a successful entrepreneur, best-selling author, coach, speaker and registered financial consultant. He is the founder of MotivationandSuccess.com, StoriesofPerseverance.org, FinancingYourLife.com and TheRetirementInstitute.org.

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