Negative financial news is everywhere, from the doom and gloom of a recession to the extreme rise and fall of the stock market to the burden of personal money problems.
Global recessions, which are a temporary period of reduced economic activity or cyclical slow down occur about every eight to ten years. This slow down usually leads to cuts in pay and layoffs in many industries. It is essential to manage your money well, so when tough times come, you are not so anxious and worried. You should focus on the following now, so you are less stressed about a recession in the future:
Learn to budget and live with-in your means. At the beginning of each month, either write down or use a budgeting app or software to record your income and expenses for the month and do not allow yourself to spend any money that is not in the budget.
A budget will help you gain control of your finances. By documenting purchases, you identify gaps in your spending and become more aware of the areas where you could cut back, such as the money you spend daily on a cup of coffee or buying lunch. If necessary, increase your income by starting a side gig or part-time job.
Stop using credit cards. Paying with cash or using a debit card is essential to staying out of debt, especially during a recession. If you must use credit cards, then pay the balance off in full every month or within the billing grace period.
Start or add to your emergency savings fund. It’s imperative to have some money set aside to cover the unexpected. When it comes to building your emergency savings, one size doesn’t fit all. Some people feel secure with only $1,000 in savings as a base amount. From experience, I have found its best to have at least one to three months of living expenses as a base amount and then grow your savings to nine to twelve months of living expenses. This amount sounds like a lot; however, if you experience a layoff and an illness, you could find yourself having to cover your necessary living expenses in addition to paying a deductible and coinsurance for your healthcare, plus your entire monthly healthcare premium through COBRA.
Setting up an automatic transfer of $50, $100, $500, or more from your checking account into savings each month, negotiating your bills by calling service providers to ask for a better rate, refinancing your auto loan with a lower interest rate, and canceling unused subscriptions are just a few ways to build an emergency savings fund.
Use a reputable Financial Advisor or a Fiduciary who has your best interest at heart. They can advise you on lowering the cost in fees you pay on investment funds in your investment portfolio, and show you how to remain or become more diversified based on your age and risk tolerance in this volatile market.
Focus on maintaining good health. By eating healthy and exercising regularly, you can save money in the future due to lower healthcare and prescription cost. Also, planning and preparing your meals in advance allows you to save the money you would have spent on eating out, and it’s healthier.
Seek God. I have grown in the understanding of what it means to seek God first, and He will see that your needs are met even in hard times. In other words, there is no reason to be stressed or worried when tough times come. Whether in a recession or not, I have learned to pray and praise God for what he has already done and to trust His Word and timing. His Word gives us direction, and because of Him, there’s nothing to fear.
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Livia Kelly is the author of UNMARRIED and DEBT-FREE. She provides basic, sound and useful information about achieving financial success on your own. Click on the HOME button at the top of this page to learn more.