Worried About Recession? 5 Things You Can Do Today

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Recessions come and go. The best you can do is prepare to ride them.

Key points

  • Recessions are a normal part of the economic cycle. It can also be painful for the average consumer.
  • Today, reworking your household budget is a good first step.
  • Now is the time to consider alternative income streams that will help you get through the tough times.

Look, we’ve had a wild couple of years. It’s safe to say that few people show up without an accident. In addition to concerns about the global pandemic, we have experienced inflation and the drumbeat of analysts saying that a recession is imminent.

Whether the analysts correctly predicted the recession doesn’t matter. What’s important is that you know you’ve done everything you can to prepare. That way, when another recession comes, you’ll be ready.

1. Rework your household budget

Some people like the word “budget”. Still, your household budget acts as a financial GPS, reminding you where to go and when to go off the beaten path. If you don’t have a budget, it’s easy to build one that works for you. If you’re on a budget, take another look.

What can you cut? Although we are years away from the next recession, it is to your advantage to cut expenses. The less you waste, the more you are save. Here are some things you can check out right now:

  • automatic and homeowner’s insurance: Don’t assume the company you’ve worked with for years still offers the lowest prices. Call around and get some quotes. It doesn’t sound like a commercial here, but you can save hundreds of years.
  • Lawn services: If you’re paying for a full menu of lawn care services, decide if there are some you can take over yourself. For example, you may still want someone to mow, but you can take care of fertilizing yourself.
  • Groceries: There are apps available to help you identify nearby stores that have the best prices on the items you need. Even if you save just $25 a week, that’s $1,300 a year.

2. Focus on high-interest debt

High-interest debt (like credit cards) and high-interest debt (like payday loans with APRs over 400%) are the enemy when it’s time to hunker down and protect your money. this Debt snowball calculator will help you figure out how quickly you can clear interest-bearing debts by putting a little extra toward them each month.

3. Fortify your emergency fund

With all the things you have to do, it can seem impossible to build an emergency fund. While we don’t recommend you do it overnight, see how much you have left after paying your bills each month. Let’s say it’s $200. Is there a way you can dedicate at least $100 to your emergency savings account?

The idea is to have enough to cover your monthly bills if you lose your job, get sick, or are unable to work.

If you’re not sure how much you should have in your emergency fund, here it is calculator can help. And if you’re feeling really worried about what the recession will mean for you, it’s okay to boost that emergency fund a little more. If you never have to dip into it, it’s a win-win.

4. Check alternative streams of income

Honestly, few people have time for extra work. But what if you could spend time doing something you love and get paid for it. For example, if you play the guitar, many people want to learn. If you paint, you’ll probably find people who want to learn how to turn a blank canvas into a work of art.

The bottom line is: Everyone has a skill of some kind, whether it’s playing chess or baking cupcakes. Find ways to monetize the things you love to do.

5. Get help if needed

If you find yourself deeply in debt, your credit is shot, and you are not sure how to rebuild, there are organizations out there designed to help you get back on your financial footing. For example, in National Foundation for Credit Counseling (NFCC) is a non-profit organization that matches you with an NFCC-certified counselor who will help you create a plan to overcome your existing debt.

You cannot control when the next recession will hit or how long it will last. You can, however, make arrangements now to protect your assets when the recession rolls around.

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