Still, with a lot of job loss throughout the nation and many dealing with uncertainty and rising costs, it’s never a bad time to strengthen your financial footing. Experts break down practical, proactive steps to bulletproof your budget — without completely upending your lifestyle.
Prioritize an emergency fund
If there’s one step that matters most during economic uncertainty, it’s building a safety net. While you can’t control inflation or whether a recession actually hits, you can give yourself a cushion.
“It’s a good idea to have at least enough money in an emergency fund to cover six to nine months of basic living expenses, which is not the same as salary,” said financial analyst Austin Kilgore in an article on money.usnews.com.
If saving a lot feels overwhelming right now, start small and build consistently, automating your savings to make it a habit.
“Most people find that even a few hundred dollars saved will greatly help cover a car repair, medical bill or other unexpected expense,” said Kilgore.
Focus on paying down high-interest debt
During a downturn, debt becomes riskier, especially variable-rate or high-interest balances. Start by targeting balances with the highest rates first.
According to an article on forbes.com, consolidating high-interest balances into a fixed-rate loan can simplify payments and help limit future interest costs.
“If you do carry a balance, it’s good to (find) a low-interest, fixed-rate offer,” said Sara Stanich, founder of financial planning firm Cultivating Wealth, on forbes.com.
Cut costs without feeling deprived
Frugality doesn’t have to mean sacrifice – it’s about spending intentionally. Experts recommend trimming non-essentials strategically rather than slashing everything at once.
According to a forbes.com article, there are many ways to save money without affecting your lifestyle – including shopping for less-expensive cell phone service, bundling insurance policies and using bill negotiation apps.
You can also find savings in everyday essentials:
- Negotiate bills yourself: Reaching out to service providers directly can often result in lower rates or promotional deals you wouldn’t get automatically.
- Buy generic: Store-brand groceries and household items are often identical to name brands at a fraction of the cost.
- Bundle errands: Cutting one or two car trips per week can save on gas.
In addition, many households pay for multiple streaming services, automatic deliveries and online or offline memberships. Eliminating a handful of these recurring charges could easily reduce your monthly bills by $100 or more.
Move your savings
The upside of higher interest rates is that many savings accounts and other deposit products are finally offering better returns.
“Banking savings is actually competitive again,” said Stanich on forbes.com.
If you have cash sitting in an account that’s not earning interest, now could be a good time to put it to work somewhere else. Nerdwallet.com regularly publishes a current list of the highest-yield savings accounts. Do your research and find the best fit – it will add up over time.
Look for ways to boost income
Cutting expenses only goes so far. Increasing your income – whether through a side hustle, freelance work or selling unused items – can give your budget extra breathing room. There are plenty of ways to make extra money, many of which can be done online or right from home.
According to an article on wallethacks.com, a recession may make traditional jobs scarcer, but people still pay for skills, wisdom and guidance – especially in industries like education, healthcare, finance and coaching.
Keep investing in the future
It might feel counterintuitive to contribute to retirement or college savings during economic turbulence, but experts warn against pausing long-term investments altogether.
If cash flow is tight, reduce – but don’t eliminate – your contributions. Then increase them again when your finances stabilize.
Practice mindful spending
Finally, recession-proofing isn’t just about numbers – it’s about mindset. Do you really need that daily latte from Starbucks?
Hold off on major purchases like a new car, luxury vacation, or home renovation unless absolutely necessary, said an article on wallethacks.com. Large purchases can quickly eat into your savings and tighten your finances at the very moment you need some breathing room.
Key takeaways:
- Build an emergency fund that can cover six to nine months of essential expenses.
- Eliminate as much debt as you can — focus on your highest balances first.
- Pare down expenses — try a bare-bones budget to avoid accumulating new debt.
- Compare high-yield savings accounts for small savings which add up over time.
- Monetize your experience and start a side hustle — leverage your experience and expertise.
- Stay the course with investments. Reduce — don’t eliminate — contributions if necessary.
- Rethink big purchases and eliminate unnecessary expenses from day —to-day spending.
Content Creator Brooke Bunch may be reached at brooke_bunch@yahoo.com.
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