You never know when you will experience an economic downturn. It could be something that hits you temporarily, or it could be a recession that lasts for a while and affects just about everybody. While things are going well or before they get worse, prepare for those lean times with a little forethought and some training.
Hopefully, you already have a budget. If not, get started today with Mvelopes by signing up for a free account above. To make sure you’re ready for a downturn, layoff, furlough or whatever else could be down the road, think about taking these steps. If you’re an optimist there are still benefits of accomplishing them if things are only looking up.
Create a Needs Only Budget
Sit down and figure the expenses you could jettison quickly if you needed to. Cable bill? Eating out? Anything else you don’t actually need, can be ready to help you live on the cheap if you have a decrease in your income. If you have an emergency fund or a few month’s of money saved up, the needs only budget can help stretch that even further.
Silver Lining: You may never have to use it.
Live Within Your Means
Make sure you’re staying within your income already, so you know where your budget gets tight now. That way you’ll be prepared to make decisions to make the budget work in a worse state. If you have two incomes, see how close you can get to living off one income.
Silver Lining: Keeping to a budget allows you to save and use your money for what you want.
Find an Extra Source of Income
Is there something you enjoy doing that could become a side business? Would a few hours on the weekend or at night be worth the extra income? Not only would you get extra money now, but you would have a job you could scale up to full-time if you lost your current one or had your hours reduced.
Silver Lining: Extra money.
If you’re already doing the first three tips, then you’re probably already on your way to building savings that can work for many different functions. If not, first, focus on a $1,000 emergency fund. Once you have that in the bank, get started on a month’s worth of income and as many more months as you want or need. Once you have that sum in the bank, you can start deciding what you want to do with your money when it isn’t needed right this minute.
Silver Lining: Extra money for a rainy day.
Keep Credit Score High
Make sure you are keeping up with your payments and are making good credit decisions, so your score is high enough that you’ll be approved when credit tightens in a recession. That way you can ensure you’re a quality candidate for that mortgage, loan or credit card.
Silver Lining: These perks are the same whether things are going well or not.
See what you’re capable of when the pressure isn’t on. If you can handle repairs, renovations or anything else you might need around the house then you won’t have to pay someone else to do it when money is tight. If there are things you think you can do, find someone who knows and is willing to help walk you through it. Try your hand at anything that needs done on a consistent basis to help cut costs.
Silver Lining: You’re a regular Bob Vila!
Change Your Habits
Budget your money and track your spending to create good habits. Identify and change any bad money habits you have, especially while money is still flowing at a good clip. Do the weekends wreck your plans consistently? Is Wednesday when you regularly buy too much online? Make changes now that will help improve your financial wellness.
Silver Lining: Good spending habits are recession proof.
Whether things only get better or if you need to put these tips to use, they’ll make sure you’re on solid financial footing now and in the future – come what may.
To get out of debt and be even better prepared for the future, take advantage of a FREE debt analysis to prioritize your debts and get them paid off faster.