5 Tips to Prepare Your Finances for a Recession
We’ve seen it over the last few months – prices for gas, food, and housing are soaring and the Federal Reserve has raised interest rates to the highest levels since 2018. Even though the economy has shrunk in the last two quarters, economists are divided over whether a recession is coming. We might not be able to predict when a recession will happen, but it makes sense to be prepared just in case.
1. Take a look at your expenses and adjust your budget: Remember, budgets aren’t
set in stone and can change!
2. Limit your spending: eating out, vacations, and extra knickknacks all add up. Take a
look at any discretionary spending and cut back. If you’re already at bare necessities, look for ways to earn extra income.
3. Bolster your emergency fund: The smartest thing you can do is establish an emergency fund and set aside enough money to cover at least three to six months of living expenses.
4. Pay off or reduce debt if you can, especially high-interest accounts: The lower your
debt, the lower your monthly expenses and the more money you can put towards
something else. Need help? Check out some strategies & tools.
5. Don’t make knee-jerk reactions with your investments: We are currently seeing a lot of market volatility so it’s important to keep your emotions in check and remember that you’re in it for the long term. Don’t make an investment decision when you’re panicking or afraid.
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