By Mark Hamrick
WWR Article Summary (tl;dr) Even the smartest minds aren’t able to predict when or how severely a financial crisis will hit. Here are a few actions you can take to protect your finances for those times when things go bad.
Who can forget the financial crisis and the Great Recession? Some of the fallout is still with us, including low interest rates, slow-growing paychecks and pockets of stubbornly high unemployment around the U.S.
Federal Reserve Chair Janet Yellen recently said that another financial crisis isn’t likely “in our lifetime.”
That sounded very strange. I thought back to the many financial calamities I’ve witnessed as an adult:
-The 1987 stock market crash.
-The 1997 Asian financial crisis.
-The 1998 collapse of hedge fund Long Term Capital Management.
-The 2001 terror attacks, which hurt the economy and the New York financial sector.
-And of course, the 2007-2008 financial crisis and stock market meltdown.
All of those occurred within just two decades. I wouldn’t want to bet that I’ve witnessed my very last shock to the economy.
“Typically the crisis never comes from where we expect it,” International Monetary Fund chief Christine Lagarde told CNBC. She said she isn’t ruling out another one.
Neither should you.
HOW TO PREPARE, JUST IN CASE
Even the smartest minds aren’t able to predict when or how severely a financial crisis will hit. What we can assume is that unexpected events of all kinds will occur.
Be ready for whatever comes. Take these steps to protect your finances for those times when things go bad.
-Build emergency savings. This can help limit the impacts of short-term unemployment, a sell-off in the stock market, a recession or a full-blown financial crisis.
-Pay down debt, particularly high-interest borrowing such as credit cards and personal loans.