During an economic slowdown, times can be challenging for many, often leading to layoffs, inflation, and rising interest rates. Economists suggest that the U.S. economy is not in the clear and may be approaching another recession in 2023, according to an Associated Press article. Knowing the signs of a recession is essential to help you determine when to cut spending. You can also look for extra cash by using these tips to help you survive tough economic times:
Understand your cash flow
Cash flow tracking is how your cash comes in and goes out each month- and to what. You may have bills that pay automatically at different times of the month. It may help to schedule your bill payments on one or two dates each month to help manage your cash flow. Use your paydays or investment disbursement dates to determine when works best so that you’re managing your cash appropriately for your situation.
Cut Your Expenses
While your finances may have thrived over the past few years, now is the time to determine where your money is going and eliminate unnecessary items. You may have to make some tough decisions. Still, it’s vital to get your expenses manageable in case you become unemployed or have an income-altering event occur.
Get Ready For An Emergency
If you have additional money, create an emergency fund that equals one, two, or three months of your expenses. Next, work toward fully funding up to six months of expenses in a savings account used only for your emergency as a cushion in case an emergency comes along at the worst possible time.
Go Back To The Basics
Make a list of things you pay for by subscription or membership to determine which can reduce to a lower rate or subscription level. You may have upgraded some subscriptions, such as an internet package, or streaming channels without commercials, for example. Determine where you are willing to cut back to save money.
Avoid The Temptation To Borrow
You may be tempted to use your credit card or borrow against your home or other assets for projects, etc. Or you may be looking at financing a new car. With interest rates likely increasing in 2023, you’ll pay more to borrow. Avoid the temptation to borrow now and finance once rates decline as they always do.
Look Toward the Future
While we don’t know when the tough times may end, look into the future to see what money is coming in and going out for the next three months. If there may be more going out, it’s time to cut more expenses or find new sources of money. Finding new money may include a part-time gig, selling a large ticket item, or a new job with more pay.
Talk to us today
Using these tips, you can withstand tough economic times. If you need more guidance, please be sure to talk to your financial professional today! You don’t have to go it alone.