Are Your Family Finances Recession Proof?

Everybody is scared of a possible recession. This has become apparent during the last global financial crisis. Now, many households are assessing the stability of their finances. Of course, no one wants to be a casualty of any possible recession. Are your family finances recession-proof? Here is a simple checklist.

1. The main source of household income is not formal employment. It is logical that employment is not a secured income source especially during recession, when many companies from across various industries fold up and dwindle. Job loss is an inevitable and potential occurrence that may happen to all formally employed professionals. It could spur financial crisis and instability.

2. Family income comes from a home-based or small business. The recent financial crisis has allowed so many households to realize the advantage of owning and operating a business over relying on formal employment. Businesses are more likely to grow exponentially. A household has the potential to earn so much more from running a business, compared with formal employment wherein monthly income is fixed.

3.  The family invests in financial products like mutual funds and bonds. Investments in stocks are not recession-proof for logical reasons. During financial crises, stocks are among the first casualties because stock prices could significantly drop based on corporate and economic performance. Investing in stocks could be great but it should be regulated during times of possible recession.

4.The family has access to urgent or immediate sources of funds. It would be best if savings could be easily accessed whenever there is a need for cash. Otherwise, it would be ideal if the household could easily tap sources of financing like loans. Credit lines are most ideal because loan amounts could be made ready all the time. The loan is formally started once you make withdrawals out of the credit line amount.

5. The household does not keep a significant amount of debts. In reality, debt is not bad. However, the household should be able to manage it carefully. The longer debt remains, the more expensive it gets due to accumulation of penalties and interest charges. During recessions, repaying of debts could be hampered, resulting in bigger penalties, and worse, possible defaults.

6. The family should keep appropriate and reliable insurance products. Whether it is car, property, life, or income protection insurance, it is ideal to invest in such products. During recession, owning such policies could bring about peace of mind especially if inevitable occurrences happen like accidents.

7. There should be a liquid reserve or an amount of cash that is always ready to be spent. Always keep cash for immediate needs. The family could observe prudence and frugality just to minimize daily costs and bolster savings.

Are your family finances recession-proof? Take time to assess your household finances now. If your finances are not recession-proof, find time to immediately set measures to establish overall financial security. Be sure family income is stable whatever happens to the economy. Always save for a rainy day. Make wise and yielding investments.

About The Author

Andrew has been helping people with financial difficulties over the last 3 years. Andrew specializes in bad credit loans and refinance solutions.