How to recession-proof your life amid economic uncertainty
Economists are divided over whether a recession is looming. What's clear is that economic uncertainty isn't going away anytime soon. But there are steps you can take now to be ready for whatever is ahead.
“Historically the economy has always been going up and down," said Ma. “It’s something that just happens, it’s a bit like catching a cold.”
But, she notes, some people’s immune systems are better able to recover than others. It's the same with finances. If you think a recession could destabilize yours, here are some things you can do to prepare.
KNOW YOUR EXPENSES AND MAKE A BUDGET
Knowing how much you spend every month is key. Ma recommends sitting down and writing how much you spend day-to-day. This will help you see what's coming in, what's going out, and which unnecessary expenses you might be able to cut.
“By understanding what money you are getting and what you are spending, you may be able to make changes to help you through tough times,” advises the Federal Deposit Insurance Corporation’s Money Smart, a financial education program.
Budgets often reveal expenses that can be eliminated entirely or impulsive spending that can be avoided with planning.
For guidance creating a budget, free courses such as “ Creating a budget (and sticking to it) ” by CT Dollars and Sense, a partnership of
SAVE AS YOU CAN
The more non-essential expenses you can cut, the more you can save.
It's not possible for everyone, but
Programs such as America Saves, a non-profit campaign by the
And if you do have a savings account, it’s important to check whether your bank gives you a good interest rate and shop around if it doesn't, Ma said.
Her advice is to keep an eye on the monthly fees or service charges that might eat into your savings. But don't limit your options. Online banks sometimes offer better rates than traditional ones.
CONSOLIDATE YOUR LOANS, AND DON'T TAKE ANY MORE
As interest rates rise, experts recommend that you consolidate your loans to have just one fixed-rate loan and, if you can, pay down as much of your debt as possible.
“Job security tends to be worse when a recession comes, it’s not a great time to accumulate debt,” said Ma.
But paying off your existing debt is easier said than done. The Federal Trade Commission’s Consumer Advice guide for Getting Out of Debt can help you make a plan.
With interest rates high, it's also not a great time to take out new loans for big expenses like cars, though experts do recommend that if you need durable goods such as vacuum cleaners, stoves or dishwashers, you buy them as soon as possible to avoid future price increases.
VISIT SECOND-HAND STORES AND YARD SALES
His son’s favorite Hi-C orange juice, which was
Since the start of the pandemic, when Galeon cut down from caring for multiple families to a single client to reduce his health risks, his household has dealt with financial instability.
One choice he’s made is to buy items like clothes or electronics second-hand whenever possible, whether from
NEGOTIATE YOUR MONTHLY BILLS
Since the pandemic, many companies have updated their relief policies and have become more flexible with users, according to
Calling providers of monthly services to negotiate bills — whether it's utilities, phone service, cable, internet, or auto insurance — can lead to meaningful savings, said McCallister-Young. Individuals can ask for the best rate, any available discounts, rebates, or coupons that can lead to a lowered monthly fee. If a provider is competitive with other companies, there's an even better chance of getting a discount, she added.
“If you tell them, ‘I’m thinking of changing' or that you're shopping around, that helps — if they know you're considering leaving, they'll give you the best rate, and the goal right now is to find as much cashflow as possible," she said.
Check out federal programs such as the
SWITCH UP YOUR GROCERIES
Grocery shopping with a meal plan, buying generic rather than brand-name or purchasing in bulk are some of the recommendations from the
“A lot of stores have price matching, so if you show them that a competitor is selling the same product at a lower rate, they'll match that,” said McCallister-Young. “You also want to be looking at the stores that are closest to you, so you're not spending the extra money you'd save on gas.”
An alternative way to save money on groceries is to check out food sharing apps such as Olio, which connects people around their community to share extra grocery items, and Too Good to Go, where customers can buy businesses' surplus food at a discount.
LOOK AT GOVERNMENT ASSISTANCE PROGRAMS
Even with these saving and spending practices, a month's wages aren't always enough to cover important expenses. If this is your situation, programs around the country are available to assist you.
“Sometimes there just isn’t enough ‘end of the month’ at the end of the month,” said
To make use of these resources, check if you qualify for the
LOOK FOR COMMUNITY ASSISTANCE
If you are experiencing food or housing insecurity, look for non-profit or community organizations around you. From housing support and food banks to utility assistance, non-profit organizations around the country can help. National organizations such as
“We’re already seeing the community reaching out to us in overwhelming numbers because of what’s happening in the country in terms of economic stability,” said
Her organization provides housing, food, and cash emergency assistance for people in the community. She said that between January and June, her group distributed over
Food assistance organizations such as Ample Harvest, Hunger Free America and Food Rescue US offer maps that allow users to search a nearby food bank by typing their zip code.
TAKE CARE OF YOUR MENTAL HEALTH
Between worrying about the bills and not knowing what your financial future might look like, your stress levels can go through the roof.
“It’s a hectic existence,” Galeon said. “You have to do a lot of managing, and you have to keep a cool head, for the sake of your mental health.”
Most health insurance covers some type of mental health assistance. If you don’t have health insurance, you can look for sliding-scale therapists around the country, including through FindTreatment.gov and the
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