An economic slowdown is coming, according to countless experts. Consumers are becoming more concerned about the future state of the economy and the likelihood of another recession. Here are five ways you can financially prepare for a recession.
- Create a Monthly Budget – Sit down and do a deep dive through your monthly expenses and learn where your money is going. Are you paying for any subscriptions that you are not using regularly? Are you spending too much money eating out? Becoming familiar with your expenses can give you an idea of what you can cut down on to ensure that you are living within your means and not overspending.
- Pay Down High-Interest Credit Cards – If you carry a monthly balance on your credit cards vs. paying the balance in full, you are potentially spending hundreds of dollars a year in interest. If you have the extra money in your budget, make larger payments to your credit cards to pay down your balance quicker.
- Start Saving for an Emergency Fund – Putting away extra money every month is crucial in preparation for a potential recession. Having three to six months’ worth of your monthly expenses in a separate account can have you prepared for emergencies and unexpected employment situations.
- Think About Your Career and Potential Earning Possibilities – Are you currently in a recession-proof career? If not, are there any educational changes you could make to help you get there? You can also consider side businesses to bring in extra money to build up your emergency fund. However, it’s not recommended that you make any large job changes if you’re applying for a home loan.
- Don’t Panic – Recessions are inevitable. But there are many things that you can do to make sure that you are prepared in case another one takes place. There are also several mortgage opportunities that can help you increase your financial flexibility and stability, like the All In One Loan™.
Let us know if you want to explore other mortgage options and reach out to your financial advisor to review your current financial situation.