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There’s a lot of talk in the news about a potential recession. Many experts believe a recession is likely in 2023, due to a combination of factors including high inflation, rising interest rates, and residual disruptions from the pandemic.
Nobody can fully predict the future. But with a recession seeming likely, it’s a good idea to prepare anyways. Here’s how to prepare for a recession in 2023.
A recession is a significant downturn in economic activity that lasts for an extended period of time.
During a recession, a number of things can potentially happen:
A mild recession may not directly affect the average household much, but more severe recessions can definitely make a difference in your personal finances.
Nobody can predict the future. With that said, a growing number of experts are warning of a potential recession in 2023 or 2024.
The main driver of this thinking is the Federal Reserve’s continual increasing of interest rates. When interest rates rise, it becomes more expensive to borrow money, which leads companies and consumers to spend less.
The Fed has been raising interest rates in an attempt to calm high inflation levels. This approach will likely work, but it could lead to a recession.
We can’t know for sure whether a recession is coming. But we can still take steps to prepare our financial situations.
Here’s how to prepare for a recession, with a special focus on our Seattle-area readers (although this advice could apply to anyone!)
Having access to savings is a huge help during economic downturns. An emergency fund is a great place to start. An emergency fund is a chunk of money set aside to cover unexpected expenses, or to cover your everyday essentials in the case of a job loss.
While long-term investments are an important part of your finances, easily accessible savings are most useful for preparing for a recession. This means that you’ll want to have some cash set aside in a savings account to bolster your finances for the coming economic downturn.
One great way to increase your savings is to sell valuable items that you no longer need. Most of us have stuff laying around that we don’t really use — why not sell it to make a few bucks?
If you’re selling gold, silver, jewelry, coins, collections, inherited collections, watches, or gemstones, Bellevue Rare Coins is the best place to sell your valuables. Our friendly team members will assess your items, prepare a no-obligation cash offer, and purchase your items for top dollar. We pay more than any other Seattle area gold buyer!
If you’re selling electronics, furniture, or other general items, you can list your items for sale on local marketplace apps. OfferUp, Facebook Marketplace, and Craigslist are all good options.
Budgeting is a great way to keep your finances on track and start saving a bit more money each month. Budgeting starts with laying out all your monthly income, and then listing your monthly expenses. It’s best to start by budgeting for the essentials, like rent and groceries, before allocating any money for optional purchases.
Then, the key is to do your best to stick to that budget, and tweak it over time if necessary. This usually means starting to track your spending so that you can align your actual spending with your budget.
Having extra money coming in every month can help you work towards your financial goals, and prepare for a potential recession. This could mean picking up extra shifts at work, starting a side-hustle, or selling unused items from your home.
We wrote about this in more detail in our guide on how to make extra money in Seattle.
High-interest debt, like credit cards and personal loans, can really put a drag on your finances. Plus, with interest rates rising, the cost of carrying debt is increasing.
If you can take steps now to reduce your debt levels, you’ll be better prepared for a potential recession in 2023.
Everyone’s financial situation is different. Maybe your career is in a “recession-proof” industry like medicine, and you’re not concerned about losing your job. In this case, taking general steps like putting a bit more in savings might be sufficient.
Or perhaps you’re in tech, which has seen recent layoffs in the Seattle area. In this case, you may want to start taking more significant steps, like updating your resume or applying for part-time work.
Ultimately, preparing for a recession is about thinking ahead, considering your unique situation, and taking any proactive steps that you can today.
If you’re looking to sell valuables in Seattle, Bellevue Rare Coins is here to help. We have convenient locations in Bellevue, Lynnwood, Issaquah and Tacoma, and we pay more for your valuables than any other Seattle-area buyer.