Recession! The name which makes almost everyone anxious and nervous. Even though it is an inevitable phase of the economic cycle and we know that we will be experiencing it in the coming months, more than two-thirds of the population is not at all ready for it. Why? Why is it that even if we know that a recession is here, we are not really ready for it? The reason could be many like lack of proper strategy to survive in the market, lack of finances for further add in the business or not being able to segregate business and personal finance. This implies that a recession period will not only adversely affect the business but also our personal lifestyle.
Now the next question that comes to our mind is, What exactly will be called ‘Being ready for a recession?’ It is not possible for a business to make their business totally recession-proof, but if one plays smart, they may be able to reduce the impact of the recession on it. This can be done by protecting cash flows, not reducing the marketing cost, making the most out of the current customers, focusing more on our core competencies, and trying to maintain our credit scores.
The current recession period which is majorly due to the Pandemic has not just affected our economic health but also our mental health. In this rough financial weather, we must make sure that even if the business is not doing good, our lifestyle should not be affected because that may further deteriorate our mental health. We must ensure a way to have a Passive Income source as well as multiple income streams that would continue to produce positive cash flow to cover our personal expenses, to say the least.
In order to ensure our personal financial stability, we need to manage our existing assets in a way that it promises to pay us the returns in almost all the conditions except insolvency (basically it should have an obligation of compulsory payment). There are asset classes such as government bonds, commercial rentals, gold Bonds, debt funds, and other government schemes which may continue to give us a monthly passive income in such times. Most of these assets are safer than investing in bank deposits which today are at a 7 year low.
It is not necessary for an individual to Compulsively inject more money into such instruments but reshuffle the existing wealth in such a way that the assets which are not generating any income become more productive in terms of creating income. The biggest take a lot of investors have done in the past is that all their investments are based on growth rather than income which is something that is going to pinch them very hard in the next one to two years. To be able to deal with the upcoming recession, one needs to make sure they are able to cover their lifestyle expenses without completely being dependent on their business or profession which is going to go through a lot of hardship in the times to come.