Recessions are never easy. Whether you're becoming aware now or already following the news of a possible economic crisis, it's good to have a mitigation plan for when it happens. Learn how to prepare your finances so they can carry you through a recession and in the aftermath with these tips.
1. Tackle Your Credit Card Debt
Credit card interest rates are astronomical at an average of 19.62%. Paying down high-interest debts will keep stress at bay and free your money to boost savings and cover emergencies.
2. Start an Emergency Fund
Save, save, save—this should be your mantra regardless of the current economic climate. You should set aside three to six months of living expenses in an accessible—and preferably high-yield—savings account. An emergency fund will be useful if you need to treat a sudden illness or fix your car.
3. Get Proactive With Your Spending
Don't wait until your job or financial security is threatened. Take stock of your finances as soon as possible. How much are your monthly bills? Which expenses do you need to cut back on? Putting a stop to lifestyle creep will help you live through struggling economic conditions.
4. Don't Ignore Your Career and Learning Opportunities
80% of American workers feel they could become jobless in a recession. With this in mind, there's no better time than now to boost your career options. You can improve your employability by adding more skills and training and by revamping your resume.
5. Learn How to Invest and Build a Portfolio
Knowing that a recession may soon be reality can be frustrating. However, it will be far worse if you haven't planned for your future financial security. If you've never invested, you can meet with a financial advisor to help you set up an investment portfolio. A well-balanced portfolio with performing assets like stocks, bonds, or money market can cushion you during a downturn.
With speculations of a looming recession, it's easy to feel helpless and alone. However, you can do something about it by taking control of your finances with a financial advisor. Get started today with our one-of-a-kind Find an Advisor tool!
You can find more tips on managing your finances during a recession here.