Washington County Weekend Post

METRO — "Financial planning" is an umbrella term that can be applied to various aspects of money management. Many people associate financial plan- ning with retirement. However, effective financial planning can help people confront today's challenges just as much as it can help them prepare for their golden years. The pandemic that spread across the globe throughout 2020 posed numerous challenges, including a recession sparked by widespread job loss and declines in economic activity. The U.S. Bureau of Labor Statistics noted that the unemployment rate in the United States exceeded 10 percent in July 2020, while Statistics Canada reported the Canadian unemployment rate was just under 11 percent in that same month. While each country has since witnessed declines in their respective unemployment rates, tens of millions of workers in both nations remain out of work. The sudden rise in unemployment and decline in global economic activity underscores the need to plan for recessions, even during those times when economies are thriving. Taking steps to recession- proof your finances is an important component of financial planning that can help people overcome the stress of living during a downturn. ■ Build up your sav- ings. A recent poll from the Kaiser Fa■mily Foundation found that 45 percent of adults said their mental health had been negatively affected due to stress related to the virus. That poll was conducted in March, shortly after lockdown measures were instituted and the term "social distancing" entered the North American lexicon. As the pandemic wore on through the summer, fall and into the winter, stress remained a big concern for many people. Much of that stress stemmed from the economy, but one way to ease that stress is to have a substan- tial amount of money in savings. Each person's financial needs are differ- ent, but many planners recommend clients have at least six months' worth of expenses in their savings as a cushion to help them get through job loss. ■ Pay down debt. Debt, particularly high-interest debt, can compromise your ability to save. A 2019 sur- vey from Bankrate.com found that 13 percent of Americans admitted that debt was preventing them from saving more money. Pay down debt like credit cards and only make credit card purchases if you have the money to pay the bill in full when it's due. ■ Avoid overspending. Many financial planners recommend a 50-30-20 approach to money manage- ment. Such an approach advises people to devote 50 percent of their earnings to needs, 30 percent to their wants and 20 percent to savings. Spending more than 30 percent on wants can make it difficult to build up a savings account to levels that can protect you in the event of a recession. ■ Expect the unexpect- ed. The American economy was doing historically well as recently as January, only to have the bottom fall out during the pandemic. If you want to recession- proof your finances, do not take your foot off the gas in regard to insulating yourself from the next recession. No matter how strongly the economy is performing, continue to expect the unexpected and prioritize saving so you have a soft landing awaiting you should the economy again take a sudden turn for the worse. The timing of recessions is unpredictable, but they are inevitable. Effective financial planning can help anyone overcome the challenges posed by economic downturns. Strategies to recession-proof your finances 4 • WASHINGTON COUNTY POST • SUNDAY, NOVEMBER 28, 2021 GMTODAY.COM MOVIES COMING SOON December 10 West Side Story December 17 Nightmare Alley Spider-Man: No Way Home December 22 The King's Man The Matrix Resurrections Sherlock Homes 3 Sing 2 January 14 Deep Water The Man from Toronto Scream January 21 Operation Fortune: Ruse de guerre

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