The last time Singapore went into recession was back in 2008. Then, the conditions were different, and there is a high chance that you were young back then to remember what had happened, or how the country’s economy had recovered. A similar predicament stands before Singapore now. The global economy was already on the brink of recession, and the COVID-19 pandemic has made matters worse.
With most of the world either going under lockdown or quarantine, and with many Singaporean companies and businesses laying off their employees, the situation will probably worsen in the next few months. Evidently, everyone is scrambling to brace themselves from this.
According to economists and experts, the global recession is a matter, not of if, but of when. And when it does occur, you must brace yourself and your family against it. Without sounding alarmist, there are specific steps that you should take so that you can ride this downturn without any risk, like.
Pay Off Consumer Debts
Consumer loans like credit card debts are often high interest, sometimes peaking at 20%. Hence, it is crucial that you try and clear as much of these loans as possible before the recession hits. If not cleared fast, the interest rate will compound over time and can end up costing you a lot in the long run. Here, you can let your education loans or mortgage run as usual, but clearing consumer debts first will create a lot of breathing room in your budget.
Boost Credit Score
On the same lines, it is also a good idea to boost your credit score. During tough financial times, banks and lenders avoid giving loans to individuals with a subpar credit score. And if during this time, you have to make a big purchase, or if you need financial help, having a good credit score can help you avail of loans much easier.
Cut Back on Spending
No one knows how bad the recession can get. Though the market predicts the downturn to last for a short while, nevertheless, it can be stressful for you. You may not get your full paycheck, or you may be laid off from your work in the worst-case scenario. Hence, you must ration your resources and minimize spending on things that you do not need. Your focus must be on the necessities, and you must identify needs from wants.
Similarly, you need to build up some emergency funds in case things go south during the recession. As a general rule of thumb, you should try and save up at least six months of your living expenses. This will give you enough time to look for another job or live comfortably through the recession.
Focus on Long Term Investments
One of the first things that investors do when they see an approaching recession is selling off all their shares and stocks. Sure, this looks like the ideal thing to do, but it is not so. Market instability creates an extreme dilemma in the minds of investors that makes them do these things. During the downturn, the companies are going to lose a significant amount of value, but you must not make any hasty decisions.
Instead, what you should do is focus on the bigger picture. If you have invested your money in the right companies with a strong financial record, then they will likely survive the recession. Hence, you must focus on riding out the storm instead of selling your stocks. On the other hand, if you know the market well, or if you have a reliable stockbroker, then you should look at expanding your investment portfolio. This is the right time to pick up healthy stocks as they will be going at low prices during the recession.
Create Additional Income Streams
There is a high chance that things either might get expensive, or you may face pay cuts in your job. Hence, you must ensure that there is a constant flow of income in your house. Thus, you should prepare a backup plan by investing some time in side hustles that can earn you extra income. If things take a turn for the worst, then you will have an alternative source of income to fall back on.
Check the Insurance Policies
You must safeguard yourself as well as your loved ones who rely on your current and future earnings. Hence, you must recheck your disability insurance and life insurance. Ensure that they cover all the basic necessities. On the other hand, if your insurance is provided by your employer, then you must recheck the terms and conditions under which they cover you and your family to protect yourself in case you are laid off from your job.
Update Your Resume, and Build Up on Skills
In the worst-case scenario, if you are laid off, then you need to have your portfolio and resume ready to go. If the recession hits badly, then many employees will be laid off from their jobs; hence, you also need to make sure that you have an edge on the others. To do this, you can build on your skills by taking various online courses that offer certificates. Having a ready profile, resume, and portfolio, along with a certificate or two in the relevant field, will put you way ahead of the curve. This will help you when you have to go looking for another job.
Given the current situation of the world economy, with the looming recession that is made worse by the coronavirus pandemic, you must follow these guidelines to ensure financial stability and safety of yourself as well as of your loved ones. And yes, there is a high chance that the recession won’t be long-lived, and it won’t be as bad. Still, following these guidelines will nonetheless help you build a strong foundation for your finances in the future.
KBB Credit SD Pte Ltd – Licensed Money Lender in Singapore
If you find that you have too many debts with different companies, let us help you to consolidate everything into one account. With only one account to manage, you will find that you have a clearer view of your finances. This allows you to keep better track of your money.
KBB Credit SD Pte Ltd, formerly known as KBB Credit, has been a licensed money lender in Singapore since 2010. With so many years of experience, you can be certain that we are able to cater the perfect loan for your needs.
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