This month, we will explore the term “VIBECESSION.” This word has emerged to describe periods of economic and social uncertainty, where the general sentiment is more negative due to economic downturns, political instability, or global crises. It’s a mix of vibes and recession, capturing how people feel during turbulent times.
A vibecession isn't just about financial indicators like GDP or unemployment rates; it's also about the collective mood and its impact on spending, saving, and investing behaviours. People might feel more anxious and cautious, leading to reduced consumer confidence and changes in financial habits. Regardless of the economic climate, safeguarding your money is always important. Here are some tips to help you do just that:
1️⃣ Review Your Budget:
Take a detailed look at your income, expenses, and savings. Identify areas where you can cut back and reallocate funds to essential needs like housing, utilities, groceries, and healthcare. Prioritize these over discretionary spending.
2️⃣ Emergency Fund:
Ensure you have an adequate emergency fund that can cover 3-6 months of living expenses. This provides a safety net during difficult times, no matter the state of the economy.
3️⃣ Debt Management:
Continue making minimum payments on all debts to avoid penalties and maintain your credit score. If possible, pay down high-interest debt faster. Financial discipline is key when managing debt.
4️⃣ Increase Income Streams:
There’s a limit to how much you can save, but there’s no limit to how much you can earn. Having multiple streams of income is beneficial, especially in uncertain times. If one income source dwindles, you will have others to rely on.
5️⃣ Diversify Investments:
Spread your investments across different asset classes to reduce risk. Avoid putting all your money into high-risk ventures. Market volatility can be nerve-wracking, but avoid panic selling your investments. Stick to your long-term strategy.
6️⃣ Protect Your Credit:
Monitor your credit score regularly and take steps to improve it. This includes paying bills on time, reducing debt, and correcting any errors on your credit report.
7️⃣ Stay Informed:
Keep up with financial news and market trends, but avoid making impulsive decisions based on fear or hype. Adopting a positive mindset, even when the economy seems challenging, can make a significant difference. Focus on what you can control.
A vibecession can be challenging, but with careful planning and prudent financial management, you can navigate these uncertain times effectively.
About Nike
Oyenike Adetoye (aka Nike) is an impactful speaker, author and personal finance expert. A Chartered Management Accountant by profession. Nike is the founder and CEO of LifTED Finance, a private financial firm that educates, coaches and supports people on their journey through financial fitness and wealth management.