The threat of a recession can be scary. You might wonder how you’ll make money if you lose your job or the stock market crashes. Fortunately, you have ways to make money during a recession. It just requires some thinking outside the box. Keep reading to learn the top ways to make money during a recession.
1. Assess your Employment Security
How stable is your job? If you work for someone, do you feel the company is stable, or will it fold at the first sight of a recession? If you don’t feel secure about your primary income, find ways to stabilize it. This could mean changing jobs, adding a second job, or starting a side gig to supplement your income just in case you lose hours or your job.
2. Redo your Budget
Budgeting isn’t anybody’s favorite pastime, but it’s essential. With an impending recession, you should cut expenses as much as possible and increase your savings. You want an emergency fund that could get you through at least a few months while the economy straightens itself out. Cut entertainment costs, cut cable, cancel subscriptions, eat at home more often, and rethink expensive activities. Instead, sock the money away that you’d typically spend to help offset the economic downfall.
3. Keep your Long-Term Investments
Don’t bail on your long-term investments even if the stock market crashes. Instead, leave them and let them ride out the storm. The market always comes back, even if it takes a few years. So if you have money invested for retirement or any other long-term goals, leave it.
4. Protect your Short-Term Investments
Any money you have invested for short-term goals may need more protection. For example, money invested in ETFs or stocks that aren’t protected in a tax-advantaged account may be better in a CD or treasury bonds. You won’t earn much on those investments, but you won’t lose money like in other risky investments.
5. Set up Automatic Investments
If figuring out what you should and shouldn’t invest overwhelms you, take advantage of dollar-cost averaging. Then, rather than overthinking, set up automatic transfers to your investment accounts without looking at the market. With this tactic, you’ll invest when stock prices are low and high. As a result, your average purchase price will even out, giving you a more stable return on your investment without the stress.
Making money during a recession doesn’t have to be impossible. Hopefully, your job remains steady during this time, and you don’t have to worry too much. But it’s always best to protect yourself.
Protect your income or even increase it, pad your savings account, and rethink your investments for the time being. With these steps in place, you’ll stay on track with your financial goals no matter what happens in the economy. Stay tuned for Part 2 of this series, where I share even more ideas to protect your money during a recession.