- Negative headlines make some Americans fear the worst for the US economy.
- While these forces are beyond your control, there are still ways to improve your personal financial security, says one adviser.
Even as inflation shows signs of cooling, some investors may be fearing the worst for the potential economic slowdown ahead.
AND recent study by Nationwide states that more than two-thirds of respondents – 68% – expect a recession in the next six months. Meanwhile, 62% of respondents believe the recession will be as severe or worse than the Great Recession of 2007-2009.
The results show that many Americans continue to experience financial hardship as they eat out less, delay major purchases like homes and rely more on credit cards, according to a survey of 2,000 people between March 30 and April 13.
Kamila Elliott, certified financial planner, co-founder and CEO of the company Collective property partnersAtlanta-based boutique consulting firm, said it has clients asking it about the prospect of a severe recession.
Elliott, who is a member of CNBC’s Advisory Board, said she reminds them that there is still very positive economic news alongside more negative headlines about bank or tech layoffs.
“One of the things I share with others is controlling what you can control,” said Elliott.
While what happens to the economy or your employer may be beyond your control, there are steps you can take to increase your personal financial security.
To improve your financial situation, Elliott recommends starting by reviewing your recent transactions and identifying where you can eliminate unnecessary expenses.
With that extra money, try to reduce your debt balances, which will put you in a more positive position if a recession hits, she said.
By increasing your emergency savings, you can also increase your liquidity, Elliott advised.
This is helpful if you are laid off or face another financial emergency. Experts generally recommend putting off spending for at least three to six months to get through such an event.
On the positive side, Elliott said the strong job market meant the laid-off clients had been unemployed for less than three months.
“Some of them turned out pretty well,” she said.
If you’re five years away or closer to retirement, it’s time to sit down with a trustworthy financial planner to make sure you’re on track, Elliott said.
Elliott said that for those still far from retirement – with that goal in 10 to 30 years – it may be time to take more risks as they have time to weather market volatility.
The average market return tends to bounce, which can result in significant progress over time.
For many, we use this as an opportunity to buy certain securities that are currently priced quite low.
President of the Management Board of Collective Wealth Partners
Elliott said it reminded her of a famous quote by legendary investor Warren Buffett: “Be fearful when others are greedy and greedy when others are fearful.”
“We take the philosophy of looking at our investments to be that there is fear and risk, and often there is opportunity,” Elliott said.
“For many, we’re using this as an opportunity to buy certain securities that are currently priced quite low,” she added.