The financial world has their ears to the ground and eyes on the stock market. Inflation has people reconsidering their life choices. It’s being rumored that a recession around the corner. So how can you protect your finances? Keep in mind that recessions are unfortunately natural part of life. Whatever you do, don’t panic. What you do now will help to fare better. Here are your 5 Recession Proof Tips:
Emergency Funds and Finance Protection
Most Americans do not have enough money saved up in case of emergency. Your first line of defense is to make sure that you increase your Emergency funds. This is money that is outside of your current bills and spending. This is funds for things like car repairs, loss of a job, basic needs like gas and food, medical bills and more. How much you should save in you emergency fund will depend on a few factors. For instance, how much debt you have. If you are actively paying off debt, you may not be able to save more. Some experts are saying you need at least 3-6 months of money saved. In the times that we are in now it may be wise to have more.
Pay Down Debt
It may be harder to acquire credit. Paying off credit cards will ensure in case of emergencies you will have available credit to help you and you family. Also be sure as a recession looms as you pay off your debt be sure to keep it as low as possible without acquiring new debt. This gives you more buying power should you need it. This also helps you not to max out your credit cards. If you already have high debt, you are more likely to max them out. Lower amounts will make you also consider what is a real need or emergency. Less frivolous spending will become necessary during a recession.
Living within Your Financial Means
The time to live within your means isn’t when the recession hits but now. Budgets for families are necessary. Developing a budget for the bottom line items is key. Develop what are your must haves. This is the basics and what a budget for wants. Decrease your wants so it can help to aid in you need or savings. According to the Consumer Financial Protection Bureau, that credit card companies can increase your interest rates on new purchases with at least a 45 day notice. Now is the time to gain control over spending. Make it a family responsible. Everyone trimming the fat to increase spending power and success after a recession.
Side Hustle-Time to Make the Finances Increase
Get a job that is in high demand. Make this second job your side hustle. This is a great way to help build you savings or emergency fund quicker. You can also help pay down your debts too. Keep in mind that having a side hustle that is in high demand also helps in case you lose your main job. A job in high demand where there is a need is where you want to focus. This is your labor industry like Food, retail, or the medical field. These are the jobs that have a large turnover but have gaps in employment.
How Can Families Protect Their Finances?
In addition to the above tips, do more at home. Keeping the family together and connected is more important than ever. Small things like eating at home more. Forego eating out and make eating at home fun. Do home themed meals. Make meals together. Do activities together as well. The stress of a recession can wear and tear on families. Make sure your family is secure. It’s important to do this before the stress comes along. Increase your family time. Get out in nature. Take a walk or hike. Get creative.
Mental Health and Finances
The lack of money definitely messes up with our mental health. Stress of money is one way to increase mental issues. This isn’t to say that people with more money have a better mental health. There are people who have it all and still struggle mentally. However when your biggest issue is where to live or getting ahead, it can be too much for many to handle. My suggestion is to not try to resolve every issue at one time. Work towards your money goals but also make sure you round out your other needs. For instance, money can be tight, get creativity in making your needs met. Talk to someone or meet with a financial advisor. Communities like church, school, or more may have free or reduced services to help in that regard.
No one is for certain what the future will hold. Recessions are apart of life. They can really break down individuals and families. Make sure you put into place some of these tips to increase the chances of coming out of recession in a better light. Find ways to increase money into your home, pay down your debt, increase your emergency fund, get a side hustle and stick to your family and friends. These 5 steps to protecting your finances will help you in your present as well as help your future. As the gas prices and rate hikes increase experts are split if the United States is nearing a recession. Whether we hit one or not, these steps ensures that you will be thoroughly prepared.
