Recessions occur due to a variety of reasons, whether it’s slow business growth, or elevated unemployment. Here’s how you can prepare for the future.
As we maneuver through uncertain times, it’s important to make sure your finances are in order. One of the first ways to prepare for economic uncertainty is to track your income and expenses. It’s helpful to look at how much money you earn for the month, the amounts you’re spending, and your essential costs, such as rent/mortgage, utility bills, or groceries. Depending on how you like to organize, some people like lists, charts, or spreadsheets. Take a look at our free, simple budgeting planner. If you are technology-savvy, try using our Money Manager online budgeting tool to track, budget, and manage your finances. You can also find many calculators and templates online for free. Be cautious of entering your personal or bank account information into a website you do not trust.
As you go through your expenses, you can begin to prioritize how you spend money. Cutting out the non-essential items, and creating a budget to stick to, is a necessary start in getting a handle on your money. It’s also a good opportunity to map out how much money you’re saving.
Putting away money during difficult times can be challenging, however, consider ways to make saving automatic. Remember, even putting a small amount of money away can help. Experts recommend having money for three months of basic expenses, like rent or food.
For more help in figuring out the details of your budget, view these tips for building your emergency savings.
Pay Down Debts
Paying down debts can sometimes seem overwhelming, especially when money is tight. However, it can be a big factor in securing your financial future. One of the easiest ways to start is by paying small amounts at a time. If there’s any money left after your essential expenses, putting that money toward debt can make a big difference.
It can also be a good time to consider consolidating credit cards to a lower Annual Percentage Rate (APR), or looking into your financial institution’s options on any loan deferrals.
Preparing your finances for uncertain times provides you relief, and better prepares you to face any obstacles. It’s important to remember that a little preparation can have a big impact.
The word “recession” might seem scary, but it doesn’t have to be with the right tools and processes in place. At Central Bank, we’re here to help you navigate any uncertainty. Please feel free to contact us, and let us help you.
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