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Concerned by talks of a slowdown? Here’s what to do.

If you are concerned by murmurs in the media or perhaps among your own office colleagues about a slowdown impacting the economy in the near future, then here is something better to do than to worry about it.

If you are concerned by murmurs in the media or perhaps among your own office colleagues about a slowdown impacting the economy in the near future, then here is something better to do than to worry about it.

Smart and prepared people never take anything for granted. The economy has, and will, go through ups and downs. What matters is your readiness to handle either. Here are some straightforward steps you can take to make sure that a slowdown, imagined or otherwise, doesn’t derail your financial life.

1. Boost your emergency fund and make sure your health insurance is in place

The first step to take is to make sure that at least temporarily, you boost your emergency fund amount to double of what is usually recommended (4 months of salary or 6 months of expenses). This will give you the necessary peace of mind to handle anything untoward (for example, an unexpected job loss) should it happen.

Make sure you have adequate health insurance in place as well. This is the biggest cost from an unexpected emergency perspective and taking adequate health insurance takes care of this.

2. Increase your savings rate

As clichéd as it sounds, the story of the ants and the grasshopper, where the ants worked hard in the summers to save for winter while the grasshopper frolicked, is quite pertinent in such times.

The simplest way to stave off any effect of a subdued economy is to save more of your earnings while you still can. It is far easier to save more from an income you have now then to spend less from an income you don’t have later. If you feel that your current work or future employment prospects are likely to be affected, then ramp up your savings. 

This will also ensure that these extra savings can continue to finance your long-term investment commitments irrespective of any temporary income hiccups.

If history is any guide, then declines are rarely permanent in case of vibrant, and strong economies like India.

3. Do not stop your long-term investments

Doom and gloom stories tend to scare investors into stopping their equity investments. This is patently unwise. Acquiring good quality companies in a falling market is one of the most effective ways in which the wealthy have made their money. As this article describes, there is nothing new about economic stress. Throughout the period, people still created wealth simply by staying invested in the asset class.

If history is any guide, then declines are rarely permanent in case of vibrant, and strong economies like India.

4. Take this opportunity to assess your career path

Ask any wise person, and they credit failure for teaching them far more than any success they ever had. If the times have you worried, why not think about how you can acquire skills and become the kind of resource that can be more “downturn-proof”?

There is very little any of us can do about the economy so worrying about it is of no value. But the above four things are what each of us can and should do to be prepared.

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