When the economy takes a hit, it’s not just your savings and investments that feel the strain; your home can too. And since your home is one of the biggest expenses, it’s smart to recession-proof it now that economists predict a 60% likelihood of a recession happening by the end of the year, according to J.P. Morgan.
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With a few smart moves, you can prepare for a recession and protect your home’s value no matter what the economy throws your way.
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Shore Up Your Emergency Fund
One of the smartest ways homeowners can prepare for a recession is by building a strong emergency fund. During tough economic times, job losses, pay cuts, or unexpected expenses can hit without warning. If a major home repair suddenly pops up, having cash on hand can mean the difference between handling it easily or tapping into credit cards.
Experts often recommend stashing away at least three to six months’ worth of living expenses in an emergency fund. However, you want to bulk it up more than usual during uncertain economic times. As a homeowner, you need to have enough cash to cover your living expenses and unexpected home repairs, so aim for six to 12 months.
Building an emergency fund that can cover a year’s worth of expenses can seem unachievable. But it’s possible if you cut unnecessary expenses, like unused subscriptions and start a side hustle.
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Prioritize Essential Repairs
If you’ve been putting off repairs that seem unimportant, it’s time to start working on them. Such home repairs can spiral into major and expensive problems down the road. And in tough times, like a recession, repair can be way more expensive.
That’s why it’s smart to handle essential home repairs now while they’re still manageable and you have control over your budget. Focus first on anything that affects your home’s structure, functionality, and safety, like roofing, plumbing, electrical, HVAC system, and foundation issues.
Invest in Energy Efficiency Upgrades
Energy costs are one of the biggest ongoing expenses for homeowners, and during a recession, every dollar saved matters even more. Investing in energy-efficient upgrades doesn’t just lower your monthly utility bills. It boosts your property’s value. Consider upgrades like:
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Adding insulation to attics and walls
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Installing a programmable thermostat
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Sealing air leaks around doors and windows
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Installing solar panels to reduce reliance on the grid
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Switching to energy-efficient appliances and lighting
These energy-efficient upgrades pay you back today with lower costs and a higher home value tomorrow. So think of it as one of the investments that protects both your wallet and home during uncertain times.
Invest in Home Improvement Projects That Will Boost Your Home’s Value
Not all upgrades are created equal. With a looming recession, focus on home improvement projects with a high return on investment (ROI). Some of the best home improvements that usually boost a home’s value include kitchen and bathroom remodels, energy-efficient upgrades, and adding curb appeal.
However, it’s important to note that there are downsides to home appreciation. As your home’s value goes up, property taxes increase as well.
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Sources:
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J.P. Morgan, ” The probability of a recession remains at 60%“
This article originally appeared on GOBankingRates.com: 4 Ways Homeowners Can Prepare for a Recession
