The phrase “economic downturn” or “recession” is enough to make anyone’s blood run cold. We’ve all seen what can happen when the economy takes a turn for the worse. Businesses close their doors, people lose jobs, and families fall into poverty. But it doesn’t have to be this way. You can do things to protect yourself and your family during an economic downturn. Here are three tips for handling your money in an economic downturn.
- Get Rid of Debt
The first thing you need to do is get rid of debt. That means paying off your credit cards, car, student loans, etc. The less debt you have, the easier it will be to weather the storm during an economic downturn. Remember, businesses tighten their belts during an economic recession, and people lose their jobs. That means you might not have as much income coming in as you’re used to. So it’s important to reduce your expenses as much as possible. Getting rid of debt is a great way to do that.
- Build up an emergency fund
The second thing you need to do is build up an emergency fund. This is a savings account that you only use in case of an emergency, like a layoff or a medical emergency. Having an emergency fund will help you stay afloat during tough times. Aim to save 3-6 months’ worth of living expenses so you know you can cover your bills even if you lose your job.
- Invest in yourself
The third thing you need to do is invest in yourself. That means taking classes, networking, and generally doing everything possible to make yourself more marketable. During an economic downturn, companies often layoffs employees who are expendable or who are replaced by automation. If you’re already employed, ensure you’re doing everything possible to stay employed. And if you’re unemployed, ensure you’re doing everything possible to find a job. The better positioned you are, the better chances you have of weathering an economic downturn unscathed.
An economic downturn can be a scary time for everyone involved. But it doesn’t have to be all doom and gloom. If you take steps to improve your financial situation now, you’ll be in much better shape when the economy takes a turn for the worse. So get rid of debt, build up an emergency fund, and invest in yourself today!