The word “recession” is everywhere right now. It’s been tossed around since COVID-19 changed the world in early 2020. The impacts of that virus have reached well beyond health issues and have permeated the U.S. economy for the past two years.
The following personal finance tips will help prepare you for the current economic times.
Lower Financial Risks
One of the most common financial risks Americans take on is a high level of debt coupled with a low savings rate. Big debt and little savings can be addressed with intentionality, though. If you pay extra payments on your debt, that lowers your financial risk as the debt balance decreases. Also, if you set aside more for savings, then you have a larger cushion for whatever life throws at you.
Add Wiggle Room
Another consideration for avoiding a big hit during a recession is to add more to your credit limit. (This is not the same as increasing your debt. Keep reading to learn how.) Request a credit line increase from your bank or credit card company. This is usually an easy request made on the company’s website.
By adding an additional amount to your credit limit, you give yourself a margin to make necessary purchases without going over your credit limit, which often incurs hefty fees.
A side job is another way to add wiggle room in your personal finances. If you’re accustomed to a certain level of income, then getting a second job or doing freelance work creates a buffer between you and life.
Use the Expertise of Others
If you already have a financial advisor or planner, now is a good time to speak with them. You’d rather be proactive and have a plan in place than to be reactive.
While we’re not financial planners, we ARE accountants with years of experience helping individuals and businesses prepare for taxes, pay themselves and their employees and determine the best ways to tackle outstanding debts.
We’d be happy to help you too.