Let's say good morning now to the host of Money on KFI. It's Joel lars Guard.
Good morning, Joel, morning Amy.
So the recession rumblings are getting a little louder. What's the latest and how do we get ready for it?
Yeah, I mean, it's one of those words that gets thrown around and people see it in headlines they start freaking out a little bit. And interestingly enough that Golden Sacks increased its recession odds twice in one week, so different, you know, different financial firms are saying, hey, it's more likely, just like putting this red flag up in the air, let you know. And the truth is it is more likely, right because of some of the governmental policy we've seen,
specifically tariffs, the likelihood that that hurts businesses and increases inflation. So, yes, the odds of our session just have gone up. Clearly, will we experience the recession? Are we potentially in one? Right now? Maybe the truth is too that recessions happen when you look at the data, something I every six and a half to seven years, So it's not one of those things where it's like this is a once
in a lifetime sort of thing. Recessions are kind of part of how the economic climate and how economies work. So recessions also shouldn't be this thing that just freaks you out to no end. But there are certain things that I want people to do in advance of a potential recession, and just kind of personal finance hygiene in general, like the emergency fund. That's a huge one. Especially right now.
Some people, and we can talk about this too, are like pre buying more stuff because they're worried about prices going up. I see the wisdom in that, maybe in small bits and pieces for certain things that you were going to buy anyway. But having if it means eliminating some of that all important emergency fund and not having as much in cash, well, if you lose your job,
you can't eat the stuff you just bought. So I want you to make sure that you have a really solid emergency fund, at least that three to six months of expenses stashed in a liquid savings account.
Okay, and that doesn't count for like a what are those short term things like a three month and six month that you can't contact with a CD. Yeah, you can't get your hands on it for a few months, or can you do that one and if you have to tap into it, you can you can.
Here's the thing I think, don't put money in a CD that you might need. Right So, a CD can be a great place for like medium term savings, but when it comes to that emergency fund, you probably don't want that in a CD. And if you have to tap it early, it means you're going to give up some of that interest. You would have been better in a high old savings account with one of my favorite banks. Anyway, something else I want people to do in advance of
a recession. I just want people to do this anyway, is create something that I call a bare bones budget, and it's essentially a budget that boils down what you could get by on every single month. So it's the bear essentials and nothing more. And I don't want people to live on a bare bones budget in perpetuity. But let's say you do lose your job or something comes
down the pike. The fact that you have created this barbones budge and you know what you can cut and you can kind of start to pair back almost immediately. That just creates not only a financial backstop but in some resiliency, but it also just helps you to realize that, wait a second, maybe I am spending more than I thought on some extra luxury items that I don't necessarily
have to have. And so to think that barebones budget in addition to the three to six months worth of expenses, and some financial folks out there are saying, oh, no, you need twelve months worth of expenses. I think that's just too much. I think most people one can't have a hard time saving up that much. And then two, that's overkill for most people when it comes to cash on hand. But if you have those two things in order, it's going to help you with if we do encounter more trying financial times.
Okay, So the two takeaways is get that bare bones budget, sit down, put the numbers down, figure it out so you know, because that gives you power. Knowing what you have gives you power. And then the other thing is start stashing your cash because you want to build up that emergency fund. That's right, just in case we might not have a recession.
And that's the thing too, like we really might not. And the other thing is a personal recession can happen at any time. This is something I want people to be well aware of, whether it's some sort of medical emergency, or it's hey, I just work in a sector that had a tough time. The American economy is booming. Unemployments are four percent, but my personal job took hit and I lost that right. So there's always the potential for personal financial difficulties even when the economy as a whole
is doing well. So I think that's why I call this like personal finance hygiene. I want people to practice these things anyway, because hey, even if the economy as a whole is crushing, there's always the potential, right that your personal life experiences some sort of recession that the other the rest of the economy isn't feeling all right.
Thee great advice as always, and you can hear more great advice just like this and a whole lot more every Sunday from noon to two on how to min with our very own Joel Larsguard. You can follow Joel at how to Money. Thank you so much for this great information, Joel
You got it Amy, Thank you