The world economy shrink in the midst of global pandemic. As we summarized from Kompas, countries have been reported managing the crisis as the clear impact of the COVID-19 including Singapore in July 2020 and followed by South Korea, Germany, Japan, France and the United States.
Just like the other countries, Indonesia’s economy entering a recession because the economic activity had fallen sharply. Forbes defines recession as a significant decline in economic activity that lasts for months even years. So, here are things you need to prepare for an economic recession.
1. Cut Spending
To stop overspending, you need to creating a budget each and every month. Start by making a list of your monthly income source(s) and expenses. You can see the exact amount to pay the bills and needs. Double check to ensure is the expense really necessary or not? Always prioritize your bills including electricity, water, food and debts.
2. Pay off Debt
Paying off debt in this situation may feel hard to do, but help you feel at ease. After creating a budget, pay off the most expensive debt first or at least pay off the debt before its statement due date to avoid hefty late fees or increased interest rate.
3. Create Emergency Fund
Nova defines emergency fund is a financial safety net that protects you from unexpected expenses will happen in your future. The essential of emergency fund is help you if you face the laid off, natural disaster, getting sick or any unexpected things that may impact your budget. As for your emergency fund, set aside 5 – 10 percent of your income each and every month. Keep yourself focus and stay consistent, do it like you need to pay off all debts.