High gas prices, multiple interest rate hikes, and a bear market are strong indicators of the next recession, as even the most optimistic economist has to admit.
Even though the unemployment rate has been cut in half since the pandemic, it is now much harder for small business owners and their employees to make debt payments and cover necessary expenses due to the uncertain state of the U.S. economy.
No one can see into the future, but it’s wise to be ready for whatever may come, including a temporary dip in the economy. The Possible Recession Survival Guide contains strategies and tips to help you achieve financial security even as the Federal Reserve continues to raise interest rates, whether that be through navigating the stock market, paying off credit card debt, or maintaining a healthy savings account.
The Ultimate Guide to Thriving During a Potential Economic Downturn
Prepare Yourself for Recession Victory
Problems with money affect more than just your bank account; they can also cause emotional distress. Having a positive cash flow is essential to making yourself as recession-proof as possible. At the end of the day, you don’t want to have to take money out of your savings to pay your rent.
It’s a smart short-term solution that will pay off, in the long run, to consult with a financial advisor. If you can’t afford a financial advisor, you can still get your financial house in order by keeping close tabs on your spending with apps like Mint and Personal Capital, sticking to a strict budget, and cutting back on frivolous purchases.
Personal financial plans can be tailored to the needs of any individual. Making a plan will help you feel more confident about your financial future, whether you want to save more in case of impending layoffs or you simply want to budget better with rising costs.
Gather Up Some Emergency Funds
Use the tools at your disposal to lighten your load (and your mind). Funding for unexpected expenses or government assistance programs can ease the burden of making it through a recession.
As luck would have it, there are numerous resources available to help you acquire quick cash. Help might be available from organizations like charities or from friends and family. The application process for an installment loan with Possible is quick and can be done entirely on a mobile device.
Try to Find Funding Options or Aids in Your Community
Do your homework on local aid programs and charities before the next economic downturn hits. The United Way 211 network, for instance, connects you with over two hundred local organizations that offer essential services in their respective communities, including bill-paying assistance.
Alternately, qualified applicants can get help paying their energy bills through the Low-Income Home Energy Assistance Program (LIHEAP). Further, social services manage numerous local aid programs.
From local food banks that don’t require proof of income to government-funded programs that help with rent in times of crisis, you might be surprised at how many options are available in your immediate area.
Advice for Making It Through the Recession
Advice that can be put into practice right away is essential in any recession survival guide. You can get through the current economic downturn if you pay close attention to the following aspects of your finances, from income to expenditures:
Reducing expenses where possible
When the economy is struggling, and inflation is high, cutting costs is a necessity. Obviously, this is a multi-stage process that may involve cutting back on gas, canceling unused subscriptions, and even decreasing your electricity bill. Your efforts to reduce expenses will not only help you keep more of your hard-earned money, but they will also help you prioritize your needs and desires.
Remove your credit card debt.
Paying off credit card debt is a great way to get your personal finances in order at any time. In light of the increase in interest rates, you should strive to get your account balance as close to zero as possible.
This recession survival strategy will help you improve your credit score and learn how to manage your finances better in the future.
Put together a spending plan, or revise an existing one.
To avoid getting into serious debt, it helps to adhere to some basic budgeting principles. And when the recession does hit, you’ll want to make some adjustments to your budget.
Keep in mind that there is no “one size fits all” solution, giving you some leeway. Additionally, many helpful budgeting apps are available for no cost, including Mvelope and Honeydue (which are aimed at married people).
Save up for a rainy day
No matter what you call it, having three to six months’ worth of savings to cover your basic living expenses in the event of a financial emergency is essential.
Now more than ever, with the current state of the economy, it’s crucial to minimize costs and put aside as much money as possible. That way, if you lose your job or have a major emergency, you will be better able to weather the financial storm.
Use a variety of revenue streams
Our last piece of advice is complementary to the previous one. Diversify your income rather than counting on a single source to keep your finances afloat.
In addition to helping you save money quickly, having a second source of income can help ease the stress that the current economic climate may be causing you. Extra money can be made by doing things like:
- Working as a taxi driver (like Uber or Lyft)
- Participating in a system of delivery drivers (like Postmates)
- Leasing out your car or a spare one
- Etsy shop selling handmade goods
- Putting your home up for rent (or an extra room in your home)
- Online tutoring or course instruction
- Making a YouTube channel… and making money off of it
Getting Back on Your Feet Financially After a Downturn
Many people’s lives will unquestionably worsen during a recession. That said, it’s still possible to make your way back up and regain your footing.
- What steps can you take to begin restoring things? Methods to recover financially from a downturn are as follows:
- Maintaining a positive payment history with your creditors can help your credit score.
- You should get a loan for credit-building purposes so that you can start a positive payment history.
- Create a savings plan with a defined goal to help offset any income reductions or cost increases.
- Try credit counseling, a balance transfer, or a new loan to help you manage your debt and get out from under it.
In summary, the most important thing to remember from the Possible Recession Survival Guide is to take charge of the things in your life that you actually have some say over.
To do so, you must first examine your cash flow and make choices that will allow you to spend less money and earn more money, thereby securing your savings.
Even in the face of the next recession, whenever that may be, following the aforementioned tips and strategies can make life less stressful. Tips on recession sighted here