We were slowly recovering from a very low depression and over the course of a decade, we were making significant strides to a successful economy. Unfortunately, a microscopic virus not only wiped out people, but our economy as well. Stay-at-home orders and closing businesses have all led to an economy that is on a downward spiral. Unemployment rates are nearly 1/3 of the current U.S. population that works.
Expert Tips
Before the National Bureau of Economic Research declares an official recession, get ready and stay on top of the game. There are many ways you can ensure that you are not at your lowest when things get tough.
Pay Down Debt
This is a no-brainer for most, but take some time to pay down costly debt, especially credit cards. The coronavirus or any hardship on your family can make you very worried about job security and paying off debt can ease your mind in these instances. Pay off the highest interest rate items first to save more money in the long run.
Cut Back
Think about all of the ways that you can cut back on expenditures. Think about the things that are absolutely necessary, like a home and a vehicle and then go from there. Do you need a monthly pedicure or can you get by with a pedicure every quarter? Look at your spending patterns and see if you can cut out a meal out every week or limit yourself to one fancy coffee a week.
Live Within your Means
Most experts recommend spending only 30% of your income on discretionary items. There are always essential items that you have to spend your income on like your mortgage, insurance, utilities, and groceries. Create a monthly budget and see where your money really goes.
Build an Emergency Savings
Setting money back is essential to attack emergencies when they arise. Use a text saving money app or just set up a regular savings account that you funnel money to in small increments, so you don’t realize you are even saving. This process should be painless and not noticeable in the big picture, so just put back a little bit at a time and you can get an entire vacation fund in no time.
Risk Tolerance
We all have certain levels of risk tolerance and our risk levels may decrease as we age, since we have less time to rebuild a fallout. You need to model your risk level to your cash out date. If you expect to use your money within the next few years, you may want to be conservative and use high-yield bonds and CDs. If you have more time to invest and will not need to withdraw money soon, it may be wiser to increase the risk level by purchasing stocks and equities.
Build Yourself Up
Invest in yourself with an education that will always be marketable. Having proper training and skills can ensure that you are not unemployed if the economy hits another depression.
