Anticipate the crisis: how to prepare your finances for a recession

by archynewsycom
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The fear of a possible recession intensifies. Although Spanish GDP continues to show signs of growth (with a quarterly variation of 0.4% between March and June of this year), economic experts warn of an imminent period of slowdown for the Mediterranean economy. This situation could lead to loss of profits by companies, which translates into a potential increase in unemployment.

In this context, sources from the financial comparator advise starting to prepare personal finances. “Although we cannot say with certainty whether the recession will reach Spain, it is prudent to be prepared in case it occurs,” they point out. And how can it be done effectively?

“Creating a solid financial cushion or emergency fund is one of the most effective strategies to face a period of economic slowdown,” they say from HelpMyCash. In the worst-case scenario, losing your job means a significant reduction in income and, in such circumstances, having an emergency fund can be extremely useful to deal with unforeseen events.

HelpMyCash experts recommend calculating fixed monthly expenses, such as rent or mortgage, food, transportation, among others. “The ideal would be to save an amount equivalent to three to six months’ fixed expenses,” they emphasize.

For example, if a person pays 600 euros monthly for rent, spends 200 euros on food purchases, spends 100 euros on supplies and 50 euros on transportation, he or she should save at least 2,850 euros, which is equivalent to three times the fixed expenses of a month. Additionally, other essential expenses such as insurance and child-related expenses must be considered.

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