Recession Money Saving Tips

1

A recession is a long period of financial stagnation and inactivity. A few factors are relevant when determining the start and the end of a recession period: gross domestic product, unemployment rate, average personal income, the volume of industrial production. From 2009 to 2019, until the burst of the COVID 19 pandemic, the US economy experienced the longest economic growth in its history. The rest of the world also plunged into a deep economic downturn with disastrous effects on businesses and personal finances. But it doesn’t have to be so disastrous if you think in advance of your personal and family budget and follow some recession money-saving tips we are giving you here.

How to Manage Personal Budget in a Recession

Recession leads to an increased unemployment rate causing a change in our spending habits. If you already have enough budget, start thinking about the adjustment of your current earnings. Analyze your budget and group your spendings according to their importance. Put your monthly spendings in one group, identify the expenses you could live in without a problem, and determine the amount you are going to put aside every month. Recession Money Saving Tips, Recession Money Saving Tips

Recession Money Saving Tips, Recession Money Saving Tips

Saving money starts with controlling your spendings. That involves the saver checking their balances at least once a week. This regular monitoring of bank accounts makes it possible to limit overdrafts. To avoid unpleasant surprises, don’t hesitate to take stock of your monthly expenses and income. If your expenses are greater than your income, you will inevitably have to reduce your expenses by negotiating certain items. To be sure if you can afford your current lifestyle, sum up all your monthly expenses and deduct that from your monthly income. If there is money left, you manage to live within your means.

We are going through many adversities right now, but that’s no reason to let go. We must know how to tackle the opportunities offered to us, regardless of the context. This crisis is an opportunity to dispel our bad habits and adopt a behaviour favourable to our personal enrichment.

Diversify Your Income

One of the most unpleasant things to happen during a recession is to lose your job. No one can predict it, but still, you can be prepared if you diversify your income. This could be the best recession money-saving tips to follow. In this way, you are insulating yourself from the risks and diversities if you stay without your main source of income. Different earning resources protect you in emergencies but also help you to increase your savings and also pay out your debts.

Find Recession-Proof Job

To ease your anxiety when a recession hits, find a recession-proof job. There is no clear definition of what it is, but generally speaking, those are the jobs related to the technology sector as well as the so-called essential services. Essential jobs can be found in the education field, accounting, medical services, for instance.

Save money for an Emergency Fund

There are parts to financial planning that we are all familiar with. Daily banking, budgeting, debt management, and retirement savings. But what about savings in an emergency?

Most people don’t have any emergency funds, and while many could not afford more than a month of expenses. If you get sick, have to do major repairs to your home, or in the worst case you lose your job, would you be able to pay your bills?

An emergency fund will shield you from going into debt for unforeseen expenses, so you won’t have to worry about this aspect in case of difficulty. It is not intended to pay for your next trip but is your personal insurance policy against loss of employment or unexpected large expense.

You can put your emergency funds in a checking or savings account. No matter which one you choose, these products all give you access to your savings when you need it.

Is investing a Good Idea in a Time of Recession?

Once your savings are established, it may be wise to invest your remaining money in the stock market, ETFs, real estate. During the 2008 recession, the US market plummeted by around 40% on an annualized basis. The Covid-19 crisis caused it to lose 30% between February and March.

It’s ultimately important to diversify your investment portfolio and to set clear objectives. If you are young and want to save for the future, buying stocks can be interesting. On the other hand, if your goal is to raise money quickly, it is better to make less risky investments, in bonds, for example. A third option is to rebalance your portfolio according to market movements regularly. Finally, it is important to get rid of the idea that it is necessary to have a lot of money to invest part of it. Even the smallest investment is likely to grow over time and pay off big.

Get the latest economy news, trading news, and Forex news on Finance Brokerage. Check out our comprehensive trading education and list of best Forex brokers list here. Subscribe now and receive FREE updates on the market today!

View original post