If you have not yet taken the time to prepare your personal finances for an economic downturn, or even a mild uncertainty, now is the time to do so! When everything goes haywire, having your personal finances in order will leave you in better shape and help protect your personal wealth when all those who refuse to see the writing on the wall start to lose it all.
As most of us know, this current economic “expansion” can’t and won’t last forever. But you can do a few things to mitigate the damages done once it finally implodes and adversely affects us all. Some of you may already know this, but it bears repeating as layoffs continue to be announce in the news and companies go under.
For starters, I’d suggest limiting liabilities and not taking on any more debt. That means, stop borrowing money and pay off what you already owe. Even if the Federal Reserve decides to lower interest rates (which it looks like they will do) making borrowing look more appealing, it just is not the right time. Being in debt during an economic meltdown is going to make things much more difficult in the event of a job loss or a decrease in your passive income. The less money you have going out, the more you’ll have to apply to the next two steps taking you far in protecting your personal wealth!
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GET SOME GOLD
Next, be prepared by insuring yourself with gold. Gold has been around as a currency and “real money” for a lot longer than the dollar. And at the rate the government is going into debt and printing money to service said debt, the dollar’s value can’t last. Inflation or even hyperinflation is a very real possibility; however, gold can be insurance against this. Gold will still buy today what it would buy 100 years ago. The same cannot be said about the dollar or any other fiat currency for that matter!
Lastly, you will want an emergency fund. Some say $1000 is enough, but I’ll disagree. While holding dollars may not be the advice given by some financial experts, right now, that fiat currency is what our financial system runs on. That means, an emergency fund that can take you through a rough couple of months could be worth it. It’s also there to protect you against a job loss as layoffs happen often during economic recessions. You’ll have some dollars (which everyone still currently accepts) to continue to pay for your necessities. There is no “right” number here, just chuck away some extra in a savings account and call it a day.
Protecting your personal wealth in this volatile economic system we are forced to participate in is simple and complex at the same time. It also isn’t done immediately. That’s why you should give yourself adequate time to buy some gold and toss some money into an emergency fund. Sure, if the dollar loses its value, your emergency fund will be worthless, but that’s what the gold is for. It’s a backup and insurance against money printing and inflation and an economic crash.
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