As the U.S. hits a recession for the first time in more than 128 months, most Americans fear the unexpected, particularly where finances are concerned. Industries that never before felt an impact by economic turns are now feeling the pressure just as much as the next company. Since the first of the year, more than 43 million Americans applied for unemployment benefits, and well-known companies are downsizing or closing their doors altogether. It is time to rethink your finances and better protect yourself and your family. Nickel Advisors offers the following recession-proof tips that help prevent an economic downtown in your personal life. Although we live in an uncertain world, simple steps ensure your family overcomes all of the challenges.
1- Reduce Debt
Pay off outstanding debts, particularly high-cost debts like credit card balances. Without excess debt looming over your head, there is more breathing room in your budget. Once you have paid off credit card debts, begin paying off auto loans, mortgages, etc. The ultimate goal is becoming debt-free. Without debt, you are free to explore more opportunities in life. Furthermore, a sense of security during these difficult economic times provides peace of mind knowing you will not become the next family struggling to keep up with their living expenses. Minimizing and/or eliminating debt is a great tip at any time, especially during times of economic uncertainty.
2- Increase Emergency Funds
Job loss can make paying day-to-day expenses difficult or impossible. Saving money for a rainy day like this can make it easier to afford rent, electricity, food, and other necessities during a downturn. Once debts are paid down, prioritize savings. Your emergency fund should have at least one month’s worth of living expenses, but if you can build up to three to six months’ worth of savings, you are well prepared for almost any situation life throws at you. The more money in your savings, the easier it is to make it through any situation without stress or worry accumulating your days.
3- Cut Back Spending
Examine your monthly expenses versus take-home income amounts to find ways to cut back. Spending less helps you save more. Saving money provides long-term financial comfort as well as certainty during the current recession. Services, products, and expenses that are not essential can be removed so you can put this money into savings or paying off debts. Subscription services, salon services, dining out, and entertainment are a few things that can easily be eliminated from the budget to improve savings.
4- Live Within Your Means
Credit cards should not be used as extra cash but instead their intended purpose: to cover expenses during emergency situations. Aim to hold only one credit card, as the annual fees for simply holding the card can add up to enormous fees. Apart from using credit cards sensibly, live within your means by following experts’ advice and spending no more than 30% of your after-taxes income (net amount.) Following this plan ensures paying off debt is easy and that you are prepared should the recession personally impact your future. Create a budget and further improve finances each month. Budgeting is essential for anyone seeking financial security.
5- Consult a Financial Adviser
We always like to think we have it all together; that expert cannot possibly tell us more than we know already. Why pay someone else to tell us practically what we know already? To that, we say you might be surprised how much you learn from a financial adviser. Sit down for a consultation with the financial advisor of your choice. Listen and learn and soon it becomes apparent why financial experts exist and the many benefits they offer to your current and long-term financial situation.
6- Create Additional Sources of Income
The more skills included in your resume, the more money you will earn in your career. More skills equal more opportunities as well. Go back to school to learn a new trade or new skill. Earning a degree can change your career path and financial stream for the better. No time to go back to school? Why not open a business and forget the 9 to 5 hustle? You can even consider a side hustle like a gig with Nickel Advisors or find a part-time job to generate more income. When there is more than one source of income coming through the door, there’s also greater comfort in difficult situations.
Becoming another statistic is avoidable if you act now. Implement the tips from Nickel Advisors into your new normal. While the world experiences new changes every day, defeating an economic downfall is possible. Keep the six tips above in mind to defeat this economic downfall and come out ahead when all is said and done.
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