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Tips for Facing a Global Recession

Edukasistan.com - Hi everyone! In this article, we will discuss Tips on how to prepare for a global recession. Recently, we have been shocked by the number of news reports about the economic recession that is expected to occur in 2023. Therefore, how can people prepare for this economic threat? Not only the government, but the community must also be prepared to face this economic threat.

Threats of a global recession must be approached carefully, especially in managing personal or group finances. Although the government states that the national economy is still stable, everyone should actually maintain the stability of their personal finances.

As we know, economic collapse is defined as a fall in the economy. According to Wikipedia, a recession is a situation in which the Gross Domestic Product (GDP) experiences a decrease or negative real economic growth for two consecutive quarters or more than one year.

One of the impacts of Job Termination is that there will be more people becoming unemployed. This condition will cause a decline in the purchasing power of the community which will have an impact on the profitability of businesses.

Tips for Facing a Global Recession

Tips for Facing a Global Recession
Tips for Facing a Global Recession

An economic recession is a significant downturn in economic activity such as business, industry, and small and medium enterprises over a period of time. This condition is often marked by low trade and Gross Domestic Product (GDP).

This sluggish economic condition usually occurs over a few months or years and causes negative economic growth for the next two quarters and an increase in unemployment rates.

Recessions are often marked by a decrease in prices known as deflation, or in other words, inflation where real estate or equipment prices experience a sharp increase. To face this risk, as a former accountant, I provide advice on how to cope with a recession to keep your finances stable.

1. You must have Insurance

By having insurance, financial risks that may affect your finances can be borne such as illness, vehicle damage, and others. Remember to ensure that the insurance you choose is suitable for your needs and the risks that may arise for you or your family.

In addition to health insurance, life insurance, and car insurance are important protection products to have and will help alleviate financial burdens if something unexpected happens.

2. Have an Emergency Fund

Having an emergency fund can also help you cope with various risks, including losing a job. By setting aside an amount of money equivalent to six times your monthly salary for married people. An emergency fund can help cover living expenses while facing unexpected situations such as losing a job.

Having both of the above things such as insurance and an emergency fund is a wise way to manage personal and family finances, especially in times of economic uncertainty such as a recession. With this, you can minimize financial risk and maintain financial stability.

3. Create a Priority Scale

Making a list of needs and determining priorities will help you manage what you want and need. So it can be arranged according to primary, secondary, and tertiary needs. In this way, you can also allocate short-term non-urgent needs for investment.

4. Avoid Long-Term Debt

To avoid financial risk during a recession, avoid long-term debt. Bank interest rates usually increase significantly during a recession. However, if you have long-term debt, consider making a plan to pay it off to creditors.

So those are my tips for facing a Global Recession, Economic crises can happen anytime and suddenly, one of them during the Covid-19 pandemic today. When facing a critical situation, there are several ways to overcome economic decline, such as reducing the risk of business failure or by investing.

However, before you decide to invest, it is advisable to check the value of the product first. This is the discussion of Tips for Facing a Global Recession. Hopefully the writing above can be useful, if there are any wrong words please apologize and thank you for reading.

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