The risk of the world sinking into depression is real. Markets are flashing warning signs as the Federal Reserve continues its inflation-tightening measures. Stock prices are continually oscillating with both the bulls and bears trying to prove their hegemony amidst the US’ most aggressive monetary tightening campaign. With the possibility of recession getting real with each passing day, all you have to do is sit tight and work towards healthy budgeting habits that will keep you afloat throughout the recession period. Some of them include:
Keep evaluating your monthly budget
Every month, review your budget to see what expenses can be eliminated. Are you overspending on clothing? Remove them. To save money, buy only what you need and choose generic over name-brand products.
Enhance your emergency corpus
Increase your savings budget as much as you can after eliminating unnecessary expenses. Ideally, you should set aside 20 per cent of your income for savings and 30 per cent for “extra” expenses like subscriptions and memberships. The best is if you can completely do away with these added expenses.
Planning for recession call for tightening your budget instead of loosening your purse strings on unnecessary subscriptions. Automate your payments to your emergency fund after you’ve reduced your extra expenses. Try to add more money to your emergency corpus. If you lose your job or have car problems, your emergency fund will be there to assist you.
Repay your high-interest debt first
You can keep track of each debt account and see how much you owe and your various interest rates. Concentrate on devoting more of your income to debt with the highest interest rates. While you’re at it, consider paying off tax-deductible debt accounts, such as credit card loans, to get money back during tax season.
Check your investments
Avoid making emotional money decisions, whether your investments are doing well or not. If the market begins to fall, consider riding it out for any upswings. Before making any major changes, consult with a trusted financial advisor.
Find ways to earn more money
Whether or not the economy is in a slump, consider starting a side hustle to supplement your income. Spend time writing an eBook, online course, or blog about a skill you've mastered and could use to earn passive income. Look for freelance work both within and outside the country. For an extra financial cushion, direct deposit your side hustle earnings into your savings account.
The global economy is in complete doldrums with so many countries at loggerheads with each other. No one knows how events will unfold in the coming future. Unless you exercise due diligence on your finances, you may find yourself in a tight spot trying to control your expenses or desperately looking for ways to add to your income.
So, be prepared before the recession hits you hard. You may feel the pinch tomorrow or the day after or maybe after a few months. What matters is how well-prepared you are to face the situation.
