Here’s how to save your finances when there’s a recession storm

KOMPAS.com – A recession is looming. That is what the experts predict. Indonesia has great potential to enter the abyss of recession (significant economic decline).

It is said that a country is in recession, when its economic growth contracts or is negative in two consecutive quarters. What about Indonesia?

The Indonesian economy still grew positively in the first quarter of 2020 at 2.97 percent. But it fell in the second quarter, that is, minus 5.3 percent. And in the third quarter it is expected to contract again, although not as badly as the previous quarter. The projection is minus 2 percent, according to Finance Minister Sri Mulyani Indrawati.

Also Read: Here’s How To Invest To Stay Profitable Despite The Recession In The ROC

From the Secretariat’s website, President Joko Widodo (Jokowi) in a recently closed meeting also said that if economic growth in the third quarter turns negative again, it means that Indonesia is entering an economic recession.

If Indonesia is hit by a recession storm, people will definitely feel the bad impact. There was a larger wave of layoffs (layoffs). The poverty rate will also increase.

If many people are laid off, they automatically no longer have an income or salary. Purchasing power has decreased. Then stop shopping. In fact, Indonesia’s relatively high economic growth has been supported by household consumption.

You must respond to this difficult situation with smart steps, especially when it comes to finances. Here are things you can do to deal with a recession, as cited Cermati.com.

Keep calm

Once hit by the recession, many people panicked. Worried about your financial situation, including yourself. On the one hand, it is natural, because during a recession, it is difficult to do something. Looking for hard work, expensive basic necessities, slow business. Meanwhile, the kitchen must remain hot.

In reality, if you panic, you can’t even focus on facing these times of financial famine. So keep thinking positive and keep trying so you can survive in the middle of a recession.

The recession is not the end of everything. Without a doubt, the government will take several measures to get out of this recession. So that the economy returns to normal and people can live more prosperously.

Learn to live worried and buckle up

When a recession hits, living frugally can save your finances. Adjust spending. Prioritize your money only to buy urgent basic necessities.

For example, eating and drinking, vitamins to maintain stamina, Internet fee for school or working from home, paying electricity and water bills, and paying debt installments.

Refrain from spending wishes that can still be postponed. Reduce unnecessary expenses, divert them to savings or emergency funds.

In these situations, it is very important to have a savings or emergency fund. Because we will all never know how long the recession will end.

Pay the debt

You can also use savings funds to pay off debt. If you have more than one debt, prioritize the payment of past due debts. Or debt with the highest interest.

That way, in times of recession, the debt burden on your finances is not too heavy. I wish I had only one debt. So that you can be debt free.

In the future, your income will only be used to meet basic needs, not to pay debt payments.

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Avoid new debt

Times are tough, don’t go for things by taking on new debt. Be it to a bank, a loan to a friend, or an online loan. Also, this new debt is used to pay off the old one.

Avoid this if you don’t want to get into financial trouble. It is better for you to save money to pay down old debt, rather than file new debt.

Vacation home alone

The recession is not the time to travel, spend money. Although you already have savings for the holidays, it is best to save the money for more important needs. Or just in case something unwanted happens at any time.

After all, you can end up spending a bigger budget. Especially for those of you who want to vacation abroad. The US dollar is rising, the rupee exchange rate is weakening. The cost of your trip is guaranteed to be inflated.

Furthermore, the Covid-19 pandemic is not over. PSBB is still running. So, just vacation home first. Do fun and fun activities like cooking your favorite food, gardening, playing video games, watching your favorite Korean drama, or cleaning the house.

Later, when things get back to normal, rearrange your vacation plans out of town or abroad. Then make it happen.

Invest or seek additional income

During a recession, don’t keep quiet. Increase your money coffers by investing. Look for investment products that are ‘immune’ to the recession, such as gold bars, short-term government bonds (SUN), and deposits.

Investing in gold is very suitable in times of recession, because it is easy to profit. This means that it is easy to sell if you ever need fresh funds. Investing is a sure way to save, even “double” your money.

If you don’t have money to invest, you can look for additional income. Sell ​​skills and experience in between your time. For example, after work or on vacation, receiving services in photography, writing, or other productive side jobs.

The recession is not to be feared

The recession is difficult to avoid, but it should not be feared. It is not easy, but if you prepare to face it, your financial situation will remain stable. Trust that the Covid-19 storm and recession will pass.

This article is the result of the collaboration between Kompas.com and Cermati.com. The content of the article is the sole responsibility of Cermati.com