Jannese Torres-Rodriguez is the founder of the blog Delish D’Lites and the podcast “Yo Quiero Dinero.” Key Points “Recession talk can strike fear in the hearts of many, especially when it comes to your personal finances. Even though they are a normal part of the economic cycle, it doesn’t mean you don’t have any control to manage the impacts a recession may have on your money,” writes Jannese Torres-Rodriguez.
“I love a good side hustle. Personally, I’m against relying on a single income source to find your life. One is too close to none, and especially in a recession, income instability is a real possibility. If you’ve always had a business idea, now is the time to try it out.”
I was born in 1985, and as an elder millennial, my first steps into the working world coincided with the 2008 Recession. I graduated from college in May 2007 and entered the workforce six months before the US economy fell into a 18 month freefall. At the time, I’d never heard the word recession before, but I learned very quickly what it was, and how real the impact could be.
I was a new graduate with a new job, but instead of getting an apartment right out of college, I made the more cautious decision to move back in with my parents for two years. My family and I weathered the recession relatively unscathed, although watching our retirement accounts take a massive nosedive wasn’t fun. But the impact of the recession was everywhere.
I saw friends lose jobs and struggle to find well-paying work. Gas prices spiked to over $4 a gallon. Foreclosures skyrocketed and many people lost their homes. Birth rates declined . It was a wild time, and many people, especially Millennials, are still feeling the impacts of the 2008 recession today. It was a harrowing time to say the least.
As a growing choir of financial analysts and economists pontificate about the likelihood of another recession , it’s important to know that you can take steps right now to shore up your finances, and weather any storm that may be headed our way.
Here are seven steps you can take to manage the impact on your finances during a recession. 1. Reduce unnecessary expenses
It’s always a good time to comb through your bank and credit card statements and see what’s going on with your money. Maybe you have a couple subscriptions which you meant to cancel but never got around to. Or perhaps you’ve been making extra trips to your local take-out restaurant instead of meal planning on the weekend. Here’s your chance to trim any fat in your spending.
Have you been a long-time customer of a particular service provider? Now is a good time to shop around and see if you’re still getting the best price for that service, or call to see if there is any room to negotiate the current price down.
A pre-paid cell phone service provider can shave thousands off your annual cell phone bill, and cutting cable in favor of lower cost streaming services are options to explore. Both strategies have worked well for me in the past. 2. Bulk up your savings
While layoffs are possible in any economic climate, the chances of you experiencing one increase during a recession. When people slow down their spending, that reduction in income affects businesses, and one of those businesses could very well be your employer. So if you typically keep a three month emergency fund, I’d recommend doing what you can to boost it, even doubling it to six months, or more.
There are a number of ways you can do this, including diverting any of the money you’re saving from trimming those non-essential expenses and looking for additional ways to earn income by side hustling , dabbling in the gig economy, or advocating for a raise at a 9-to-5 .
Best case scenario, you don’t lose your job, and you’ve just created an extra cushion that can grant you peace of mind, or can be used for a larger goal, like buying a home, when the economy is on the rise again. 3. Prioritize paying off high-interest rate debt
Interest rates went to zero during The Great Recession, in order to stimulate spending. We’re seeing the opposite happen, where interest rates have jumped in just a few short months. When interest rates go up, borrowing money becomes more expensive. The biggest impact for most will be the price of variable interest rate debt, […]
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