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5 Ways To Financially Prepare Yourself For A Potential Recession

We’re not calling for a 100% chance of recession in our financial forecast. Because no one knows exactly what the future holds. But that hasn’t stopped a media storm from a brewin’. 

You’ve likely heard fears of recession a lot recently. Coverage of the war, down market, poor bond performance, and interest rate hikes has been riddled with them. But it’s critical you keep your head and act proactively in the face of fear. 

Below you’ll see the strategies we use to help clients prepare for the worst. Use them to build yourself a financial bunker of sorts. That way, if the storm hits, you’re the one who’s ready to wait it out. Let’s get started.  

1. Solidify Your Emergency Reserve

How’s your rainy day fund? Is it equipped for the market downpour? Because you’ll want a minimum of 3 months of living expenses on hand. 

Now wait a second. What exactly are your “living expenses?” Because you might feel like you’re dying without an HBO subscription, but you’re not. What you need covered are things like your mortgage (or rent), utilities, health insurance, car, and groceries. 

Now those are living expenses!

Also, 3 months is the minimum. You may want to beef it up to 6 months. Especially when you consider that the average bear market runs 388.8 days.1 Together we’ll help find the right timeframe for you that keeps you protected, but still tracking for retirement. 

2. Find Ways To Save NOT Spend

Do you really need to go out to eat again? Is now the best time to get the basement remodeled? Are you getting enough value out of that TV and movie subscription?

Geez, you guys really hate HBO!

We don’t. We love watching you own the things you want. What we hate is watching those things own you. And sometimes you need to be shown some tough financial love

It’s hard changing your financial habits. But when you take inventory of what things are truly costing you, it can be a much-needed wake up call. Together we’ll help you analyze your expenses, and identify areas where cutting back brings back confidence. 

Big Ticket Items

These deserve special attention. Especially during the holidays. That’s because it’s easy to use them to justify overconsumption, overpriced gifts, and out-of-budget trips. 

We’ll help you create experiences you’ll actually want to remember. That jewelry, car, or getaway might look good now. But if you can’t afford to ball out, a recession will have you bawling your eyes out. 

Let’s plan ahead instead!

3. Be Honest About Your Job Security

How are things at your job? You may be in search of a new one, or feeling unsure about the security of your current one. Either way, this is a key consideration in a time like this.

While there may be no such thing as true “job security,” there are positions that seem particularly vulnerable to recession. CNBC recently asked economists to weigh-in on the industries with most vulnerability pending a possible recession.2 They included:

  • Manufacturing
  • Real Estate
  • Retail
  • Construction

Your income may be the main thing keeping you (and your family) afloat. And while it’s unpleasant to think about, preparing for possible job loss is vital. Now’s a good time to get your CV in order, look at your savings, and develop a long-term plan with our team. 

4. Know Your Fears Ahead Of Time

Times of financial security leave you prone to major financial mistakes. And some of the biggest revolve around your investments. So make sure you’re aware of the bad ideas ahead of time. 

What our experience with clients has repeatedly shown us:

  • You will be tempted to panic sell
  • You will be tempted to chase market trends 
  • You will be tempted to overcorrect into “safer” investments (e.g. bonds, CDs)

Panic selling realizes losses, and leaves you with less capital to reinvest. Chasing market trends (typically) leads to rapid losses in value. And overcorrecting into “safer” investments can leave you failing to keep up with inflation, and taking advantage of long-term opportunities (the biggest mistake, actually).

5. See The Long-Term Opportunities

Not everything’s about being on the defensive. When staring down the barrel of a recession, it can make sense to fire back. A key investor mindset is being able to see opportunity where others see fear. 

During a recession the entire market takes a hit. But that doesn’t mean the market as a whole is a bad long-term bet. It’s the opposite actually. The S&P 500 has bounced back rapidly from past economic bottoms. Check out the following rebounds that happened in less than year:3

  • 19%+ following the low of the Dot-Com Bubble burst
  • 35%+ following the low of the Great Recession
  • 36%+ following the low of the COVID-19 crash 

Together we’ll help you take advantage of a time when investments are on sale. We’ll help keep your thinking dialed in on the long-term. And we’ll be at your side as you resist the temptations of the short-term. 

Crafted Finance Helps Every Step

At Crafted Finance, we don’t want you to panic. But we want you to be proactive. And with talks of a potential recession looming in the future, now’s the time to take action. 

As a team, we work with our clients to regularly take inventory of both their assets and their spending habits. This identifies critical areas to build up (ex: emergency funds), and areas to cut back (ex: big ticket items). 

We also work closely with clients to make sure of their thinking in the long-term. And we’re able to put a plan in place that handles the potential job losses, scarcity-driven mentalities, and opportunistic investments a recession can produce.

We’re ready to help you take back your confidence, and prepare for a potential recession. So feel schedule a complimentary consultation call, or call us directly at (650) 336-0598. We’ll help devise a plan that works for you. And we’ll work to keep your retirement on track in the face of recession. 

Investment Advisory Services are offered through Crafted Finance, LLC, a registered investment adviser. Please remember that securities cannot be purchased, sold or traded via e-mail or voice message system. This advertisement and any documents, files or previous advertisements may contain information that is confidential or legally privileged.  If you are not the intended recipient, you are hereby notified that you must not read this transmission and that any disclosure, copying, printing, distribution, or any action or omission of this transmission is strictly prohibited.  If you have received this advertisement in error, please immediately notify the sender by telephone at (650) 336-0598 or return and delete the original advertisements and its attachments without reading or saving in any manner.

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Kingston Hollman MBA is a seasoned professional in the field of compliance, known for his extensive expertise and dedication to maintaining regulatory integrity within organizations. With a strong educational background and years of experience, Kingston is a trusted authority in the compliance arena.

Armed with a Master of Business Administration (MBA) degree, Kingston possesses a profound understanding of the intersection between business strategy and regulatory adherence. He combines this knowledge with a meticulous approach to ensure that organizations navigate complex compliance landscapes effectively and ethically.

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Kelly Gosiewski

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Kelly Gosiewski is a Client Service Administrator known for her unwavering dedication and exceptional client-centric approach. With a career spanning several years in the financial services industry, Kelly has consistently demonstrated her ability to provide top-tier support to clients and ensure their needs are met with the utmost professionalism.

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Throughout her career, Dionne has been a trusted right-hand to C-suite executives, adeptly managing their busy schedules, prioritizing tasks, and facilitating seamless communication within the organization. Her ability to anticipate the needs of her superiors and proactively address them has been a hallmark of her success.

Joe Wride CFP®

Founder & CEO

Meet Joe Wride, the president and founder of Crafted Finance. With a knack for pension and investment management, insurance, and financial planning, Joe’s all about offering top-notch services without breaking the bank. That’s why he started Crafted Finance!

A proud Finance major from Washington State University, Joe’s got the credentials to back it up as a Chartered Life Underwriter and CERTIFIED FINANCIAL PLANNER™ Professional. Since 2009, he’s been helping individuals, families, and pension plans make sense of their finances. Joe’s even on the board of the Financial Planning Association’s Puget Sound chapter. Check out his LinkedIn profile here.

Joe gets that everyone’s got their own money story. That’s why he’s crafted a unique process to help folks of all stripes manage their finances, whether they’re flying solo, raising a family, or running a company. He’s all about learning and growing to make sure his guidance is just the right fit for his clients.

When he’s not crunching numbers, you’ll find Joe enjoying the Seattle life. He’s into skateboarding at Alki beach, biking, golfing, snowboarding, hiking, and camping. Sports fan? You bet! Joe’s a die-hard supporter of the Cougars, Mariners, Seahawks, and Sonics. But what really matters to him is family time with his wife Jessica, daughter Ocean, and dog Kanga. Joe’s excited to welcome more kiddos into their home through foster care and adoption in the future.

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