An economic collapse is coming.
All indicators are showing it’s an absolute certainty.
Here are the steps you can take to weather a scary economic storm.
Donald Trump has overseen a strong economy.
His tax cuts and deregulations, particularly in the energy sector, have led to record-high gains in the stock market and record-low levels of unemployment.
Federal receipts are up despite the cuts, and wages are up, too.
However, due to decades of irresponsible fiscal and monetary policy, market corrections are expected every 7-10 years.
The last one happened in 2007-08, so we’re long overdue.
If unprepared, an economic collapse can be devastating.
The 2008 crash triggered worldwide global panic.
Here are some steps you can take so you won’t get caught off guard during an economic downturn.
The first thing you need to do is have money saved.
Jobs can unexpectedly come and go during a slowdown, so you have to be prepared to temporarily live off savings.
The main key to building savings is eliminating debt.
Debt typically accrues faster than wealth, so it’s very difficult to build savings with mountains of debt hanging over your head.
After the 2008 collapse, the Fed under Obama dropped interest rates to near 0%, meaning savings accounts became worthless.
This encouraged people to spend instead of save and borrow cheap money (take out loans at low interest rates).
While they may have “stimulated” the economy, it made people more susceptible to the next financial crisis.
Over half of Americans don’t have enough in savings to survive a $1,000 emergency.
Don’t get blindsided like this. Figure out your budget and squirrel away at least 3-6 months of living expenses.
The next step is budgeting correctly.
Keep track of all your monthly expenses and purchases, then look to see where you can cut back.
It’s easy to lose track of how much money you’re spending when you’re swiping your debit card all day.
For that reason, it’s best to have your emergency fund in cash because you’ll be far less likely to spend it.
When all of your transactions are listed in a spreadsheet, it makes managing your spending habits and looking for areas to cut back much easier.
Finally, look for investment opportunities.
One of the realities of a downturn is the stock market takes a hit.
That means that good companies that were perhaps overpriced will be going on sale.
If you’re closer to retirement, this might be a better option than hoping for your index fund to rebound, which could take over a decade.
While the market is highly likely to rally over time, downturns can last a while, so that could be an untenable situation.
If you cut down on debt, cut down on spending in order to save money, and look for investment opportunities to earn a yield greater than 0.1% in a worthless savings account, you’ll be in a good position to survive a scary economy crash.