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As the U.S. economy shrinks for a second straight quarter — one definition of a recession — many Americans aren’t prepared for an economic downturn.
Financial advisors agree that you have a lot of control.
According to the survey, less than half of Americans feel financially secure enough to weather another recession. a surveyPersonal Capital, a digital wealth manager
According to the report, which polled approximately 1,000 Americans across generations in May 2022, the top fears were inability plan for the future and difficulty paying bills or losing your job.
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According to the survey, the average emergency savings amount is $7,600. This may be less than what is needed. Advisors recommend three to six months of living expenses. However, experts may recommend more flexibility.
He said that no one can predict when a recession will occur, so it’s important to concentrate on what you can control, such as how much money you’re saving and spending.
Sachs stated, “If we look at your personal financial balance, and like many people you’re living beyond your means, that’s arguably unsustainable.”
Recession or not, job losses can occur at any time.
Sachs said, “If you don’t evolve and you don’t possess a skill set that is in demand, then regardless of what’s happening in the economy, you could find yourself in your own personal recession.”
Experts say that investors are now facing increasing recession fears due to soaring inflation, rising interest rate and stock market volatility.
“People are being very short term defensive, regardless of their long-term goal,” stated Bill Parrott (CFP), president and CEO, Parrott Wealth Management in Austin.
Although some people still have fears from 2008’s financial crisis, they are more likely to act on their emotions and sell assets impulsively, which could cause them to lose future gains and risk their plans.
According to a J.P. Morgan Asset Management analysis, the market’s 10 greatest days in the past 20 years occurred after the worst, which included the 2008 downturn.
Parrott’s firm gets a panicked call and reviews the client’s financial plan in order to determine how stock market volatility could affect their goals.
“I am sure every advisor would say’stay in market’, but we back that up with our financial plan and show them data,” he said.