If you’re feeling like your finances are stretched to the limit lately, you’re not alone. The rising cost of products and services along with climbing interest rates is making it hard for many consumers to make ends meet. Worried about a recession? Here are 8 tips to protect your finances.
- Figure Out Where Things Stand
Don’t postpone being proactive with your finances. Spend time looking over your finances so you know exactly how you’re doing financially. This allows you to determine what changes are needed to prepare for a recession.
- Work on Building an Emergency Fund
If you’re not in the habit of saving money, it’s time to start doing so. Put aside a small amount of money from every paycheck. The more you’re able to set aside, the better prepared you’ll be to handle the unexpected.
- Cut Costs
Pay attention to where you’re spending your money and look for places to cut costs. Try to save money on food by eating out less often, shopping with coupons, or being creative with leftovers. Look for clothing in thrift stores and yard sales. Avoid wasting fuel or electricity.
- Look for Ways to Increase Your Income
Increasing your income is a good way to prepare for a downturn in the economy. Think about whether it makes sense to look for a better-paying job. There are also many options for picking up a side hustle to supplement your regular job. You can even sell items you no longer want on eBay.
- Pay Down Debt
Work on paying down your debt, especially credit card debt or any other loans you currently have with a high-interest rate. The lower your outstanding balances, the less you’ll be paying for interest as interest rates rise. If you’re unable to pay down credit cards, consider a debt consolidation loan and compare rates to what you’re currently paying.
- Stick to a Budget
When a recession looms, it’s more important than ever to create a budget and stick to it. Be mindful of how much money you have to work with and where your money is going and set limits on your spending.
- Live Within Your Means
Many people find that as their income goes up, so does their spending. More money often means more expensive vehicles, clothing, and vacations. Pay attention to your spending habits and work on spending less than you earn. Avoid relying on credit cards to make ends meet.
- Protect Your Credit
The better your credit is, the more likely you’ll be able to borrow money at the lowest available interest rate. Be careful to always pay your bills on time and try not to carry a balance on credit cards any higher than 30 percent of the available amount. Review your credit reports at least annually to make sure there isn’t any inaccurate information being reported that could be hurting your credit score.
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