Speaker 1: Let's say good morning now to the host of Money
Speaker 1: on KFI. It's Joel lars Guard.
Speaker 2: Good morning, Joel, morning Amy.
Speaker 1: So the recession rumblings are getting a little louder. What's
Speaker 1: the latest and how do we get ready for it?
Speaker 2: Yeah, I mean, it's one of those words that gets
Speaker 2: thrown around and people see it in headlines they start
Speaker 2: freaking out a little bit. And interestingly enough that Golden
Speaker 2: Sacks increased its recession odds twice in one week, so different,
Speaker 2: you know, different financial firms are saying, hey, it's more likely,
Speaker 2: just like putting this red flag up in the air,
Speaker 2: let you know. And the truth is it is more likely,
Speaker 2: right because of some of the governmental policy we've seen,
Speaker 2: specifically tariffs, the likelihood that that hurts businesses and increases inflation. So, yes,
Speaker 2: the odds of our session just have gone up. Clearly,
Speaker 2: will we experience the recession? Are we potentially in one?
Speaker 2: Right now? Maybe the truth is too that recessions happen
Speaker 2: when you look at the data, something I every six
Speaker 2: and a half to seven years, So it's not one
Speaker 2: of those things where it's like this is a once
Speaker 2: in a lifetime sort of thing. Recessions are kind of
Speaker 2: part of how the economic climate and how economies work.
Speaker 2: So recessions also shouldn't be this thing that just freaks
Speaker 2: you out to no end. But there are certain things
Speaker 2: that I want people to do in advance of a
Speaker 2: potential recession, and just kind of personal finance hygiene in general,
Speaker 2: like the emergency fund. That's a huge one. Especially right now.
Speaker 2: Some people, and we can talk about this too, are
Speaker 2: like pre buying more stuff because they're worried about prices
Speaker 2: going up. I see the wisdom in that, maybe in
Speaker 2: small bits and pieces for certain things that you were
Speaker 2: going to buy anyway. But having if it means eliminating
Speaker 2: some of that all important emergency fund and not having
Speaker 2: as much in cash, well, if you lose your job,
Speaker 2: you can't eat the stuff you just bought. So I
Speaker 2: want you to make sure that you have a really
Speaker 2: solid emergency fund, at least that three to six months
Speaker 2: of expenses stashed in a liquid savings account.
Speaker 1: Okay, and that doesn't count for like a what are
Speaker 1: those short term things like a three month and six
Speaker 1: month that you can't contact with a CD. Yeah, you
Speaker 1: can't get your hands on it for a few months,
Speaker 1: or can you do that one and if you have
Speaker 1: to tap into it, you can you can.
Speaker 2: Here's the thing I think, don't put money in a
Speaker 2: CD that you might need. Right So, a CD can
Speaker 2: be a great place for like medium term savings, but
Speaker 2: when it comes to that emergency fund, you probably don't
Speaker 2: want that in a CD. And if you have to
Speaker 2: tap it early, it means you're going to give up
Speaker 2: some of that interest. You would have been better in
Speaker 2: a high old savings account with one of my favorite banks. Anyway,
Speaker 2: something else I want people to do in advance of
Speaker 2: a recession. I just want people to do this anyway,
Speaker 2: is create something that I call a bare bones budget,
Speaker 2: and it's essentially a budget that boils down what you
Speaker 2: could get by on every single month. So it's the
Speaker 2: bear essentials and nothing more. And I don't want people
Speaker 2: to live on a bare bones budget in perpetuity. But
Speaker 2: let's say you do lose your job or something comes
Speaker 2: down the pike. The fact that you have created this
Speaker 2: barbones budge and you know what you can cut and
Speaker 2: you can kind of start to pair back almost immediately.
Speaker 2: That just creates not only a financial backstop but in
Speaker 2: some resiliency, but it also just helps you to realize that,
Speaker 2: wait a second, maybe I am spending more than I
Speaker 2: thought on some extra luxury items that I don't necessarily
Speaker 2: have to have. And so to think that barebones budget
Speaker 2: in addition to the three to six months worth of expenses,
Speaker 2: and some financial folks out there are saying, oh, no,
Speaker 2: you need twelve months worth of expenses. I think that's
Speaker 2: just too much. I think most people one can't have
Speaker 2: a hard time saving up that much. And then two,
Speaker 2: that's overkill for most people when it comes to cash
Speaker 2: on hand. But if you have those two things in order,
Speaker 2: it's going to help you with if we do encounter
Speaker 2: more trying financial times.
Speaker 1: Okay, So the two takeaways is get that bare bones budget,
Speaker 1: sit down, put the numbers down, figure it out so
Speaker 1: you know, because that gives you power. Knowing what you
Speaker 1: have gives you power. And then the other thing is
Speaker 1: start stashing your cash because you want to build up
Speaker 1: that emergency fund. That's right, just in case we might
Speaker 1: not have a recession.
Speaker 2: And that's the thing too, like we really might not.
Speaker 2: And the other thing is a personal recession can happen
Speaker 2: at any time. This is something I want people to
Speaker 2: be well aware of, whether it's some sort of medical emergency,
Speaker 2: or it's hey, I just work in a sector that
Speaker 2: had a tough time. The American economy is booming. Unemployments
Speaker 2: are four percent, but my personal job took hit and
Speaker 2: I lost that right. So there's always the potential for
Speaker 2: personal financial difficulties even when the economy as a whole
Speaker 2: is doing well. So I think that's why I call
Speaker 2: this like personal finance hygiene. I want people to practice
Speaker 2: these things anyway, because hey, even if the economy as
Speaker 2: a whole is crushing, there's always the potential, right that
Speaker 2: your personal life experiences some sort of recession that the
Speaker 2: other the rest of the economy isn't feeling all right.
Speaker 1: Thee great advice as always, and you can hear more
Speaker 1: great advice just like this and a whole lot more
Speaker 1: every Sunday from noon to two on how to min
Speaker 1: with our very own Joel Larsguard. You can follow Joel
Speaker 1: at how to Money. Thank you so much for this
Speaker 1: great information, Joel
Speaker 2: You got it Amy, Thank you