There have been a lot of questions and a lot of worry recently over the direction of the stock market and whether its good run is up.
Carl Carlson, CEO of Carlson Financial spoke with News 3 on how to prepare for a recession.
First, he said focus on what’s within your control. You can’t control what the markets do or whether there may be a recession on the horizon. Instead, assess your job security. We do have control over our own income, spending and saving. Work hard to make yourself indispensable to your company and keep the income stream you rely on. Network and form relationships with those in your company and with others in your network. Keep your resume up to date so you’re ready to go in case something happens. Many companies are hesitant to hire during a recession, so getting ahead of the curve may put you in a better position. It’s also time to take control over your income and where it’s going.
Taking control of your income means over where your income is going. Pay down debt and boost your emergency savings. Many people have the best intentions to do this, but if there ever was a time, it’s now. If you get in the practice of doing this now, you’re also create some breathing room in your budget in the event of a job loss.
Three to six months worth of expenses in an emergency fund is a good rule of thumb but Carlson said having six-12 months is better. During the Great Recession, average unemployment lasted 29 weeks, and longer for those over 55. If you don’t have an emergency fund, start one.
Assuming your retirement is long-term investment, you should not make any changes to the way it’s invested. What someone may want to do is instead of directing their contributions to a pre-tax account like a traditional IRA, instead contribute to a Roth IRA.
You can always withdraw the contributions from a Roth, penalty-free. In this way, you’re still contributing to retirement but it can act as a last-resort emergency fund.