As central banks around the world raise interest rates simultaneously in response to inflation, the world may be edging closer to a critical global recession by 2023.
Besides, a string of financial crises in emerging markets and developing economies will have long-lasting negative effects, according to a comprehensive new study by the World Bank.
Because of that, we need to make early preparations to face the economic turmoil that will hit with better and careful management of finances and expenses. Otherwise, we may receive quite severe consequences.
World Bank has already warned that the financial crisis is critical and will hit the whole world in 2023, including Malaysia. So, what preparations do we need to do to deal with this problem?
The 5 things you need to prepare
According to a tweet by @DirectlendingMY, here are 5 things that you need to prepare to face this crisis:
1. Emergency fund
If you can’t afford it for six months, collect three months first. If the salary is RM3,000 per month, there should be at least RM9,000 in the emergency savings fund. If you are single and have no big commitments, try to ‘force yourself’ to save 40% to 50% of your salary. If there is a lot of commitment, 10%-20% is fine.
2. Generate side income
If you have a car you can do e-hailing, if you have a motorbike you can be a rider/food delivery. If you want to work from home, you can try Fiverr, Upwork, Freelancer, Swifty and others.
3. Avoid adding new commitments
Want to buy a car? Buy if you really need it. Try to apply for a loan with a fixed interest rate and buy a car under the qualifications. For example, if you are qualified for a RM80K car, buy a RM50K car.
4. Avoid quitting work
If you want to resign, make sure you have another stable source of income.
5. Don’t buy unnecessary things
Additionally, if the current phone is still okay and has no problems, the iPhone 14 is not even necessary. Also, forget your intentions and it’s better to save money in an emergency fund.
Sources: Siakap Keli, @DirectlendingMY