Recession Ready: How to Prepare if the Summer Gets Dire

Don’t just prepare for this recession; prepare for any other downturns that come your way with these three steps.

| More on:
A red umbrella stands higher than a crowd of black umbrellas.

Source: Getty Images

Economists continue to state that a recession is coming for 2023. The thing is, it’s now looking like it’s going to be summer rather than a spring recession. That means we still have time to prepare for an economic downturn.

But what does that preparation for a recession even mean? Let’s look at three ways you can prepare your finances for a rough summer.

Pay off debt

First and foremost, before you’re putting savings aside or making investments or any of that, you need to pay off your debt. Your debt is costing you money for every single month you hold it. Interest rates, fees and other costs all add up, with even thousands of dollars simply being wasted in order to hold debt that could be paid off sooner.

So, go through your budget, reduce your costs, and put as much money aside to pay off debt as soon as possible. Make a list of all your debts from highest interest rate to lowest, and work on the first debt while paying the minimum of the rest. Should you have just credit card debt, you could be debt free by summer!

Work on that budget

As mentioned, a budget will certainly also help. But while you may have a budget in your household, I’d say it could use a serious overhaul for a number of reasons. Rising interest rates, inflation, and a recession on the way means you need to prepare your budget and then some.

So, look again at what you can cut. This could mean serious cuts, such as selling your car for a cheaper version. It could mean choosing less-expensive food items or eating out less. Or it could be simply walking to work to save on gas. Whatever you choose, put those costs towards your savings.

Save and invest

Yes, the final step is now creating savings to help you through the rough summer. This can be done by putting that cash you’ve saved aside. It can also be done by even selling items you don’t need around your home or renting things out.

Use that cash to put into a savings account where you can go on to invest it. I would suggest a company like NorthWest Healthcare Properties REIT (TSX:NWH.UN) as a solid option, as the company is in the healthcare sector. This is a sector that doesn’t disappear during a downturn. Further, shares are quite valuable with the company continuing to post strong earnings. This includes an average lease agreement of 14 years and a 97% occupancy rate.

You can therefore use your cash to invest in the company’s dividend yield at 9.82% as of writing. That could certainly bring in a lot of cash and a lot of savings. But don’t spend it! Use it to create an emergency fund that will get you through this recession and any future ones to come.

Bottom line

A recession can be a scary thing. But taking these steps can help you not just prepare for this one, but help you create enough savings to prepare for any other financial strains that come your way.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Amy Legate-Wolfe has positions in NorthWest Healthcare Properties Real Estate Investment Trust. The Motley Fool recommends NorthWest Healthcare Properties Real Estate Investment Trust. The Motley Fool has a disclosure policy.

More on Stocks for Beginners

Stocks for Beginners

Invest in These Stocks to Make the Most of Your TFSA

If you are unable to find fundamentally strong stocks for your TFSA in 2023, here are two great stock picks…

Read more »

Stocks for Beginners

2 TSX Stocks to Smooth Over the Market’s Bumps

Here are two of the safest TSX stocks you can buy in June 2023 without worrying about high stock market…

Read more »

healthcare pharma
Stocks for Beginners

3 Undervalued Canadian Healthcare Stocks to Watch in 2023

These three healthcare stocks remain down during this market, making them all great opportunities for those seeking long-term gains.

Read more »

tsx today
Stocks for Beginners

TSX Today: What to Watch for in Stocks on Thursday, June 1

An early morning recovery in oil and base metals prices could help the commodity-heavy TSX index start the new month…

Read more »

Woman has an idea
Stocks for Beginners

My Top 5 Stock Picks for June 2023

June is the time to buy seasonal stocks. But with fears of recession looming, my stock picks are resilient growth…

Read more »

analyze data
Dividend Stocks

How to Build a Diversified Portfolio With These Top TSX Stocks

Looking to diversify your portfolio? The market is full of stellar options to consider, including these top TSX stocks to…

Read more »

potted green plant grows up in arrow shape
Stocks for Beginners

Why 2023 Will Be a Stellar Year for Growth Stock Investors

There are plenty of options for growth stock investors to consider. Here are two options outperforming the market right now.

Read more »

funds, money, nest egg
Stocks for Beginners

I’d Aim for $1 Million Buying Just 5 To 10 TSX Stocks

Are you looking to build a $1 million portfolio? Then focus your investments on 5 to 10 stocks instead of…

Read more »