How can I prepare for another economic crash?
That’s a good question. Many people are convinced that the economy will get much worse before it gets better. I don’t know either, if or when a crash will occur. But, if times get harder in the future, here are some suggestions that may help you prepare.
First, I recommend paying down your debt. Regardless of what the future holds, this is always a good idea. Many people thought their home equity lines were safe and would always be available. Recently, some home equity lines have been frozen, reduced, or even called. For years, people have used their home equity line as their financial safety net, or emergency reserves. Now that’s changed for many. In the future, I would rely on cash as a safety net, and not a line of credit. Make a commitment to pay down your debt and establish an emergency fund.
Next, I would take a serious look at your career path. Our economy is always changing. Consider the industry you are currently in. Does it hold a promising future? Will your current career meet your future needs? Now is a good time to consider more education or even a different career.
Then, I recommend reviewing you insurance. Make sure you have adequate coverage for the potential risks in your life. In a perfect world, we could all afford the best insurance for every risk in our lives. Unfortunately, we don’t live in a perfect world. Be sure to discuss your needs with a qualified professional.
Finally, create a worst case scenario based on your circumstances. What would that be for you? Might it be losing your job or a disability? Maybe it’s a failing business or taking care of family members. This may not be a fun exercise, but it will cause you to think about how you would handle an event which could be financially catastrophic.
No matter what the future holds, sound financial decisions are always a good idea.
If you have a financial question for Ross, you can use the Marino on Money page.