If you’ve been watching the news lately, you’re all too familiar with the downward trend of our economy. Many economists are hinting at a recession, and you may find yourself asking, “What should I do to manage my finances?” Here are a few things to keep in mind:
Below are a few tips from financial experts to help you budget for the unknown.
Most economists suggest you put aside 3–6 months of living expenses to draw from during hard times, but let’s be honest—sometimes that isn’t feasible. The most important aspect to managing your finances is saving something, even if it’s just a couple hundred bucks. Every little bit counts during unexpected events, so building your savings during a period of economic volatility is a wise policy.
Another aspect of your savings portfolio to consider is your comfort level with locking up your money for a period of time. For example, different credit unions have different maturity windows, meaning the availability of funds depends on the terms of the product. Should you need funds before the maturity date and need to withdraw early, it’s possible you’ll be hit with a penalty or fee. It’s essential to consider these factors before committing long-term, especially if you think you’ll need to draw from your savings in the near future.
When managing your finances, one aspect you can leverage is having the flexibility to draw on your credit when needed. Whether it’s through your credit card or equity in your home, an open line of credit at your disposal could make all the difference.
Just make sure you’re not falling into the trap of sacrificing your future financial well-being for the sake of the present. Exceeding your credit limit and making late payments is a surefire way to damage your future lending options. Poor credit can even impact your ability to:
- Rent an apartment
- Get a cell phone plan
- Get additional loans
Your credit score follows you, and unfortunately, repairing it doesn’t happen overnight. It’s something that takes time.
When your financial circumstances change, and you need to take out credit to bridge financial gaps, your credit score can drop. Luckily, you can take preventative action by getting your credit score in great shape before it’s too late. Pay your bills on time, reduce your credit balance, and check your credit report for errors. This will help you start from a stronger position if you need credit in the future.
Worried about the status of your credit score?
Take a look at a few tips to improve your current credit.
All too often, it’s easy to forget about unused credit rewards, but these points have real value, and can help you properly manage your finances. Approximately 50% of U.S. adults have unredeemed credits, worth more than $20 billion in total. And, about 31% of U.S. adults have never redeemed credit card rewards at all. In these tough times, don’t leave money on the table.
If you don’t have a healthy emergency fund in place, now’s the perfect time to build one. Emergency funds are one of the most effective personal finance tips because they’re designed to offer additional security.
Even if you have an emergency fund in place, consider contributing a higher amount to it so you have extra padding. Having more money put aside helps you stay ahead of economic recessions, giving you a jumpstart on managing your finances.
Whether you’ve lost consistent income or you’re worried about adequately managing your finances, a side gig can help:
- Raise your income
- Diversify your income streams
- Strengthen your emergency funds
- Improve other financial planning initiatives
By seeking out alternative income channels, you can prioritize savings, staying ahead of any disruption to your finances. If financial trouble occurs, you’ll already have money set aside to offset that loss. Earnings from your side gig can support other financial goals, such as saving for retirement.
Another practical tip to managing your finances is adjusting your rate and terms on existing loans. Most financial institutions offer options for debt consolidation. If you qualify, you can lower your overall monthly expenditure by consolidating debts into one payment, which is held at a lower interest rate.
Refinancing student and auto loans is another strong option that could lower your monthly payments. Refinancing is a great way to help yourself financially during economic uncertainty.
If economic uncertainty has thrown your financial plans into disarray, don’t wait until your finances spiral out of control to seek out help. Consult with a trusted financial planner who can review your current standing, recommending adjustments with the ultimate goal of curbing—or even avoiding altogether—the financial problems sitting on your shoulders.
If you’re looking to refinance your loans—you’re in the right spot. Finance Solutions provides quality refacing avenues to keep you afloat in murky waters. Wanting to see how much you could qualify for? Try our cost estimate calculator and see how much you could save.