Jeremy Tauri is an associate at Plus Chartered Accountants.
It seems that everywhere you look at the moment, there's a coronavirus scare
story lurking, ready to convince you that we're all approaching economic
doom.
I'm not going to make a call on whether a recession is just around the
corner - if I had that insight into the future I'd probably be
off buying
Lotto tickets.
But I can tell you that at some point, economic circumstances will change.
Here are some things that you can do to help get through it, whether it's
covid-19 induced or not.
Understand your own risk factors: Economists like to talk about things at a
very high level. They talk about economies' growth slowing and the job
market as a whole. But no one lives their lives like that. Your situation is
unique - as are the risks you're facing. If you're employed, consider how
exposed your employer is to changes that are happening in the market. Are
they responding well to that or can you see increased pressure likely to
come on in future? If the are warning signs, you might want to think about
how you can make yourself more flexible and employable so you can navigate
the job market easily if need be. If you run a business, consider the
threats and opportunities that are unique to your business. It's entirely
possible to have your own recession even while the rest of the economy is
booming. Don't let that happen.
Watch your spending: I'm not saying you have to cut your spending - that's a
good way to turn the prospect of a widespread recession into a real one. But
it's a good idea to have a sense of where and how quickly you could trim the
amount of money heading out of your accounts. That will give you a sense of
how resilient you are to downturns. Work out your budgets to what a minimum
might look like then review its realism.
Understand your plan: A short-term hiccup doesn't need to be a big deal if
you're still on the right track overall. Don't worry about your KiwiSaver
balance dropping if the settings are right and don't worry about a minor
blip in your business turnover if you understand why and have a good
strategy to get back on track.
