Newspaper headlines have blared warnings of a recession in the U.S. for a few years now. The downturn hasn’t come yet, but experts swear it’s on the horizon. Regardless of whether you live in America or another county, the threat of a recession is always looming.
While most of us haven’t lived in a The Grapes of Wrath-type depression, many of us have experienced hard times, either firsthand or watching our parents go through it. Part of the reason why the idea of a recession is terrifying is because it can come seemingly out of nowhere.
Many people struggle with financial security, but finance blogs, such as mywealthandinvestment can help simplify the steps to getting your finances in order.
Recessions are Difficult to Predict
The stock market and health of the economy are passing thoughts to most people. We rely on experts to tell us when to invest and when to withdraw before things get hairy. However, it turns out that predicting a recession is a very difficult task.
Any economic system is complex and nuanced. A macro economy that millions of a country’s residents depend on is even more vulnerable to unexpected downturns. What can you do to protect your financial security?
7 Ways to Stay Afloat During a Recession
Given that recessions can happen with little-to-no warning, it’s essential to stay prepared to some degree. However, overly worrying about the economy can lead to major anxiety. Instead, focus on these 7 tips for surviving a recession.
1. Prioritize credit card debt first
Most people carry a significant amount of debt – credit card bills, student loans – on top of their regular monthly bills. Paying your credit card debt should be your top priority because a missed payment racks up interest, fines and affects your credit score.
2. Set money aside for emergencies only
When you’re trying to save money, it seems futile to set a portion aside for later when you need it now. However, building a small nest egg can avert financial catastrophe in case of an emergency, such as expensive car trouble or unexpected illnesses.
3. Cut out all non-essential bills
The hard truth is that many people struggle financially because they live outside their means. Do you really need 200 channels on the television that you never watch? You don’t have to cut the cord completely, but scale back on splurges or services you don’t really use.
4. Make a budget and stick to it
Budgets are the cornerstone of adulthood. Budgets are particularly helpful if you spend all of your allotted funds at the start of the month and don’t have enough to cover bills due later in the month. Of course, budgets only work if you stick by it and reduce or get rid of unnecessary financial burdens.
5. Keep track of your spending
Keeping track of your money goes hand-in-hand with a budget. With the popularity of debit cards, it’s easier than ever to spend money you really shouldn’t. One way to keep track of your money is to pay in cash and keep a notebook of cash purchases. Seeing it in black-and-white writing somehow makes your money more invaluable to you.
6. Invest in your education
One of the worries of recessions is that they often lead to major layoffs. Unless you own the company – and sometimes even then – your job is never truly safe. If you have the time and inclination, continuing your education in your skilled field can help create a safety net that other employees may not have.
7. Get a side hustle in the gig economy
The gig economy is task-type jobs people do in their free time. Rideshares, meal delivery and pet sitters are the most prominent types of gig economy work at the moment. The second job is less like a job and more like an errand that you get paid to do. You can make your own schedule and set your hours around your full-time, regular job. The flexibility is the main attraction to task jobs.
Your Financial Security is Important
Regardless of whether a recession is truly on the horizon or not, keeping your finances healthy can benefit your life in many ways.