It seems that you can’t turn on the television or the radio without hearing the doom and gloom reports about our national economy. Most of the talk centers on a US recession (impending or existing depending on who you talk to), inflation and the bursting of the housing market bubble. All of this talk is enough to make even the calmest person panic. But is panic necessary? The short answer is “No”. The long answer is that some, if not all, of the economic news will affect you. However, panicking won’t do you any good but implementing some sound financial strategies will. Read on to find out what you can do to protect yourself and your family from the consequences of less than ideal economic times.
First, know the facts…
What exactly is a recession anyway? Simply put, a recession is a longer than normal decline in the economy. All economies go up and down on a regular basis. If the down period lasts longer than expected then the country is considered to be in a recession. The National Bureau of Economic Research (http://www.nber.org/) is the organization that officially determines if our economy has been down enough to declare a recession. During a recession people and organizations typically buy fewer goods and services. This in turn leads businesses to slow down or halt hiring new people and in some cases forces them to lay off some of their employees.
Recessions don’t affect all areas of the country the same. In Wyoming we have seen quite a bit of growth in our economy over the last couple of years. In fact, the current forecasts indicate that employers will have a hard time finding enough employees. This is in stark contrast to other areas that are forecasting higher unemployment rates.
Second, heed the warning…
Now is the perfect time to get your finances in order. Wyoming’s economy is holding its own today, but historically we have experienced some hefty downturns. By getting your finances in order now you will be able to take advantage of the opportunities available in a good economy and will be prepared to weather any downturns that come our way.
If you haven’t already done so, start an emergency savings fund. Most financial advisors recommend having enough money in this fund to cover three months of expenses. In an economic downturn, where finding a new job can be difficult, it is wise to increase this figure to six months of expenses and up to a year for one-income families. Now is also a good time to reduce credit-card and other high-interest loans.
If you are interested in getting more information on this topic, please email me and let me know. I will put you on the Community Development mailing list and keep you posted on upcoming events. Plans are currently underway to offer financial management workshops in the Cheyenne area.
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