An economic recession is something that is out of our control. However, we can control how we plan, prepare, and respond. When the worst happens, the following money-saving tips will be lifesaving to have in your back pocket.
1. Maintain a Savings Account for Emergencies
If you haven’t already, now is the time to start saving for a rainy day. Having a backup emergency fund set aside solely for the purpose of helping you get through a financial hardship will be tremendously helpful in the event of an economic recession. If possible, it’s recommended that you have 3 to 6 months’ worth of wages saved up, so that a large, unexpected expense doesn’t result in running up your credit balances without the means to pay it off.
2. Pay Off Your Debts with a Budget
Debt can feel like carrying a heavy burden on your back. That weight will only be intensified in the event of a recession, being that the uncertainty of external factors (like job security and interest rate spikes) could make it harder to pay down your debt. The first step you should take to become debt-free is to establish an accurate budget that will help you manage incoming and outgoing resources.
If you can feel a recession approaching in the imminent future, it might be time to start thinking about living a more frugal lifestyle (which might not be as difficult as it sounds). Downsizing can be an extremely advantageous strategy, because if you can learn to make do with less now, you’ll increase your savings and start preparing for a time when you’ll need to cut back.
4. Diversify Your Income
The phrase, “Don’t put all your eggs in one basket” rings true in the event of an economic recession. Uncertainty is high, and it’s better to be safe than sorry. It might be a good idea to investigate additional forms of income (bonus points if they involve activities you enjoy!) Try dog-walking, babysitting, or perhaps think about selling the empty furniture set that’s collecting dust in your spare bedroom. Whatever it may be, having a second or even third income flow will only give you more security when everything else in life isn’t guaranteed.
It’s never too late to start planning and preparing for an economic downturn – you’ll be thanking yourself in the long run. If you need further assistance or advice, visit our Retirement and Investment Resource Center to schedule a no-obligation meeting with our experienced Financial Professional, Wendy Cundari.*
*Wendy Cundari is a registered representative with, and securities and advisory services are offered through LPL Financial (LPL), a registered investment advisor and broker-dealer (member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates. Wheelhouse Credit Union and Wheelhouse Investment Services are not registered as a broker-dealer or investment advisor. Registered representatives of LPL offer products and services using Wheelhouse Investment Services, and may also be employees of Wheelhouse Credit Union. These products and services are being offered through LPL or its affiliates, which are separate entities from, and not affiliates of, Wheelhouse Credit Union or Wheelhouse Investment Services.
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