Time: “A Recession Is Widely Expected. Here’s How to Prepare”
Time, Dec. 10, 2022 — Marguerita Cheng, CFP® Pro is featured in today’s article by ANNA-LOUISE JACKSON who writes: “Speculation about a potential recession has plagued much of 2022, and is now seen as all but inevitable in 2023. Asset management giant BlackRock recently wrote in its 2023 Global Outlook report that a recession is ‘foretold,’ while in December, JPMorgan Chase CEO Jamie Dimon reiterated a prediction that a recession is coming in 2023. A survey published by business-focused think tank The Conference Board in October found that 98% of CEOs were preparing for a U.S. recession in the next 12 to 18 months.”
Prioritize paying off high-interest debt
Shoring up your finances also means tackling debt. “The first thing I would tell people to do is to pay down variable rate debt, like credit card debt,” recommends Marguerita Cheng, a certified financial planner and the founder and CEO of Blue Ocean Global Wealth in Gaithersburg, Maryland.
Be sure to check the interest rate your lender is charging you and have a strategy for paying off debt, even if it takes time. Starting that process now will help you to build up your cash reserves—which will free you up to do other things, like investing in financial markets, Cheng says.
The fate of President Joe Biden’s student loan forgiveness program is still up in the air, though borrowers have received another extension on student loan payments into 2023.
Update your résumé
Layoffs and cost-cutting measures are already starting to sweep through the tech and media sectors, which could be a bad sign for other industries. A spike in unemployment occurs during recessions and though you may not be able to escape a layoff, you can be prepared.
If you have some extra cash, take advantage of professional development opportunities through your employer or via continuing education or certification programs, Cheng says. “Make yourself more valuable to your employer and improve your skills.”
Get creative about saving
Think creatively about other ways to save more money. For example, evaluating your insurance options to make sure you have the best option for your personal circumstances could mean the difference of several hundred dollars each year, Cheng says.
Consider other ways to earn more money—be it asking for a raise or adding another revenue stream through a side hustle. Now is a good time to evaluate your entire financial picture, ahead of a recession, so you’re not caught by surprise. These things don’t last forever, so making sure you’re prepared is vitally important. “Just be proactive.”