5 things not to do in a recession

Do not lose sight of your life goals. A recession can be a stressful time. It's important to keep your long-term goals in mind. What do you want to accomplish in the next 5, 10 or 20 years? Stay focused on your goals and don't let a short-term setback derail your plans.

We have listed some financial risks you should avoid taking during an economic downturn. Here they are :

1- Do not sign an adjustable rate mortgage

With a variable rate mortgage, the interest rate granted is not fixed. It adjusts periodically according to market rates. As a result, the amount of your monthly repayments could decrease but also increase.

However, an increase in your monthly payments during a recession could be difficult to budget for. With a variable rate mortgage and an increase in monthly payments, if you have to face financial difficulties or a job loss, for example, you would no longer be able to make your payments.

2- Don't make big purchases and don't stop saving

Consider large purchases anything over a month's salary that you would normally finance or pay by credit card. During a recession, it is best to avoid making major purchases so as not to get into debt.

Don't stop saving. You might be tempted to stop saving during a recession, but that would be a mistake. An emergency fund is essential to overcome any financial difficulties that may arise. Try automating your savings so you don't have to think about them during tough times.

3- Do not contract any new debt

If you can, avoid taking on new debt during an economic downturn. Don't get into a new car loan or personal loan. It may be difficult to make your monthly payments if your income decreases with inflation.

If you are already in debt, it is better not to add more debt during a recession. Use your credit cards sparingly and only for essential purchases. And if you can, try to repay more than the minimum payment each month to reduce your debt load.

4- Do not quit your job

Even if you're unhappy with your job, it's important to hold on during a recession. Indeed, losing your job would mean losing your income, which could make it difficult to pay your bills and meet your financial obligations.

Don't make rash decisions. A recession can be a stressful time. It is all the more important to think carefully before making important decisions. In hindsight, you'll be glad you took the time to think things through.

5- Do not dip into your pension savings

Retirement may seem a long way off. It's important to keep this in mind during a recession. Be sure to keep contributing so you can enjoy a comfortable retirement later.

If you have a pension savings account, resist the temptation to touch it during a recession. Indeed, this would not only reduce your savings but could also result in taxes and penalties.

Do not abandon. A recession can be tough, but it's important to stay positive and remember that it won't last forever. Things always end up getting better. Once you pass this milestone, you will be back on track to achieve your financial goals.

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