If you were around in 2008, you might remember what happened the last time a recession hit. A lot of people lost their jobs and unemployment soared, even as prices for everything increased. It’s not an experience anyone is eager to repeat.
That’s why so many people are wondering if a recession is coming in 2022. The answer to that depends on who you ask and what day you ask them. While you’re waiting to find out, though, there are some steps you can take that will make getting through a recession easier.
Build up Your Emergency Fund
Having an emergency fund is a good idea regardless of the state of the economy. If you know a recession is coming, though, one of the best financial moves you can make is to put as much money into a savings account as possible, until you have at least three months of income. This will ensure that you can get through almost any financial emergency, and it will be invaluable if you lose your job due to a recession.
Pay off Your Debts
If you’ve ever had to pay off a debt, you know how it can drag you down financially. You don’t need that kind of hinderance in a recession, where you’re trying to make sure every dollar counts. The sooner you get your debts paid off, the better prepared you’ll be if and when a recession hits.
There are a lot of strategies for paying off debts, but the two most popular strategies involve focusing on either your biggest debt or your smallest first. Once you’ve taken care of your initial debt, you can then focus on paying off your next biggest or next smallest debt with the money you were using to pay off your initial debt.
If you’d really like to make paying off your debts easier, though, you can apply for a debt consolidation loan that will condense all your payments into one convenient monthly payment. Since the interest rates on a debt consolidation loan are usually lower than they are on debts like credit cards, you’ll probably save some money as well.
Take your first step to becoming debt free
Review Your Investments
If you’re putting money aside for retirement or have other money you’re investing, it’s time to look them over and make sure they aren’t vulnerable to the short-term whims of the market. In fact, you might want to talk with a financial advisor about making most of your investments long-term so they’re less affected by a recession downturn.
Cut Spending
Almost everyone has seen their budget get tighter thanks to inflation, and if a recession hits it will mean a lot of people’s budgets will get even tighter. In other words, this is a good time to look for ways to reduce costs.
When most people hear this, they automatically think about having to live an austere life where the most fun they can ever have is hunting for bargains at the grocery store. However, there are a lot of ways to find extra money in your budget without having to sacrifice.
One of the easiest ways is to look for services you’re not using, like subscriptions to Netflix or Hulu. You can cancel your subscription, save money, and if a show comes on you’d like to watch, all you have to do is start your subscription again.
You can also find more money in your budget when you plan out your meals for the week. Think about what you’ll be eating, especially for dinner, then look at various grocery stores to see if they’re offering a sale on ingredients. Admittedly, this can be a bit of work, but it will all be worth it when you sit down to an aromatic home cooked meal that isn’t costing you an arm and a leg.
Finally, shop around for some competitive rates on services such as car insurance and Internet. You might be surprised on how much you’ll be able to save by changing companies.
Prepare for Your Next Job
No one likes to think about losing their job. However, history has shown that when a recession hits, companies tend to lay people off in order to reduce their expenses and keep themselves profitable.
You may not be able to control if a company decides to keep you or not, but you can take steps to make sure you land on your feet if you get the pink slip. Start by updating your resume and making sure it lists your current job, along with all the accomplishments you’ve undoubtedly racked up. Next, start reaching out to other people in your field, either through social media or by finding a professional networking group.
Another way to prepare yourself for a job search is to make sure you’ve got the latest knowledge in your field, whether it’s IT or data entry. This will make sure your skills are up to date, and it might just impress your bosses so much they make keeping you a priority.
Protect Yourself From a Recession With First Alliance Credit Union
Going through a recession is never fun. However, you’ll have an easier time if you build up your savings, make sure you’re debt-free, and make sure you’re ready to find another job if you get laid off.
You can also use the tools and services First Alliance Credit Union offers to make sure you’re ready if a recession hits. You can take out a debt consolidation loan to make paying off your debts more convenient, put aside money in a high-interest money market account or even get a no hassle loan if you need some extra money to take care of an unexpected expense.
