The National Bureau of Economic Research (NBER), the exclusive judge of deciding when an economic downturn begins and ends, has spoken. The United States is officially in a recession.
This news, however, isn’t much of a surprise for many Americans. The plummeting economic output and double-digit unemployment figures offer clues to what’s going to happen in the months ahead.
The recession is a time to take precautionary measures to safeguard your money and survive the downturn. Here are six suggestions:
Pay Down Outstanding Debts
Create a breathing room in your budget by paying off high-cost debt, such as the outstanding balance on your credit card. Also, focus on other types of loans, such as car loans and mortgages. When you’ve eliminated these high-cost obligations, you’re in a better position to save more money in the event of an emergency.
Beef Up Your Emergency Fund
A job loss makes it hard for you to cover your everyday expenses. Loading up your rainy-day fund makes helps you pay off your living expenses while you’re searching for work.
If you’re still paying off debt, you should always make saving a priority. Try to boost your emergency reserves with at least a month of your everyday expenses. Then, eliminate your debt and beef up your rainy day fund to six months’ worth of cash.
Not sure where to stash your savings? Look for a savings account with a high interest rate. Alternatively, check with a financial planner to determine the ideal account that best matches your lifestyle and needs.
Reduce Your Monthly Spending
Take a good look at your monthly expenses and separate the necessary items from the discretionary ones. Expense items, such as a night out with friends and TV subscription services, add up over time, and eat up your savings. Get rid of these discretionary expenses for the time being.
Live within Your Means
Now is not a good time to go shopping or book a vacation at a fancy hotel or destination. During these difficult times, spend less than the income you’re getting during this time. Come up with a budget to stop you from overspending.
Create an Emergency Plan for Your Investments
When a recession hits the country, expect the stock market to undergo a significant downturn. If you have market investments or a 401(k), think about what you should do when the market crashes and burns. Having a solid plan prevents you from making haphazard financial decisions. If you’re not sure how to go about this, get in touch with a financial professional who could create the right plan for you.
Continue to Sharpen Your Skills
Pursuing an education is a smart investment to help make your life recession-proof. An article from The Mercury News reveals that individuals who graduate with a degree are likely to be better off than people with no degree at all.
During these difficult times, never stop learning — and don’t feel satisfied with the bachelor’s degree you earned years ago. Enroll in free online courses to help you stand out from the crowd.
According to NBER, a recession ends when the economic bleeding stops, which could take years. Taking note of these financial suggestions will help you ride out the economic downturn.