Gas, food and rent prices have gone up. The Federal Reserve hasat the highest level since 2018. The US economy has contracted for two consecutive quarters.
Economists are divided on whether a. What is clear is that economic uncertainty is not going away anytime soon. But there are steps you can take now to be prepared for what lies ahead.
Yiming Ma, an assistant professor at Columbia University, says it’s not a question of when the recession will happen. People should prepare but not panic, she said.
“Historically the economy has always gone up and down,” Ma said. “It’s something that just happens, it’s like catching a cold.”
But, she notes, some people’s immune systems are better able to recover than others. The same is true of finance. If you think a recession could destabilize you, here are some things you can do to prepare.
Know your expenses and create a budget
It’s important to know how much you spend each month. She recommends sitting down and writing down how much you spend per day. This will help you see what’s coming in, what’s going out, and what unnecessary expenses you might be able to cut.
“By understanding how much money you’re getting and what you’re spending, you may be able to make changes to help you through tough times,” advises the Federal Deposit Insurance Corporation’s Money Smart, financial education program.
Budgets often reveal expenses that can be eliminated entirely or impulsive expenses that can be avoided with planning.
For guidance on creating a budget, free courses like “Creating a Budget (and Sticking to It)” by CT Dollars & Sense, Partnerships for Connecticut State Agencies, and Nerd Wallet’s budget calculator may be good places to start.
Save as much as you can
The more you can cut unnecessary expenses, the more you can save.
It’s not possible for everyone, but Gene Natalie, co-founder of Troutwood, an app that helps people create financial plans, says it’s ideal for those budgeting to save enough to cover basic needs for three to six months.
Programs such as Save America, a nonprofit campaign by the Consumer Federation of America, can help create a roadmap.
And if you have a savings account, it’s important to check whether your bank gives you a good interest rate and shop around if it doesn’t, said Ma of Columbia.
His advice is to keep an eye on monthly fees or service charges that may be on your savings. But don’t limit your options. Online banks sometimes offer better rates than traditional ones.
Consolidate your debt, and don’t take on more
As interest rates rise, experts recommend that you consolidate your loans for a fixed-rate loan and, if you can, pay off as much of your loan as possible.
“When a recession hits, job security gets worse, it’s not a good time to accumulate debt,” Ma said.
But paying off your existing debt is easier said than done. The Federal Trade Commission’s Consumer Advice Guide to Getting Out of Debt can help you make a plan.
With high interest rates, this is not a good time to take out new loansHowever, experts suggest that if you need durable goods like vacuum cleaners, stoves or dishwashers, you should buy them as soon as possible to avoid future price increases.
Check out second hand stores and yard sales
Allen Gallen, a homemaker in California, has been hit by the rising cost of household staples like groceries, paper towels and gas for his commute for months.
Her son’s favorite Hi-C orange-flavored drink, which was $1.99 for a six-pack, is now $2.50.
Since the start of the pandemic, when Galion cut back from caring for multiple families to a single client to reduce his health risks, his family has faced financial instability.
One choice he makes is to buy items like clothes or electronics second-hand whenever possible, whether from Goodwill, pawn shops or Craigslist. But be careful when transacting with strangers through classified ads on Craigslist, and read safety tips before using the online marketplace.
Discuss your monthly bills
Since the pandemic, many companies have updated their relief policies and become more flexible with users, according to Kia McCallister-Young, director of America Saves.
Calling monthly service providers to negotiate bills — whether it’s utilities, phone service, cable, Internet or auto insurance — can yield meaningful savings, McCallister-Young said. Individuals can ask for the best rate, any available discounts, rebates, or coupons that can lower the monthly fee. If a provider is competitive with other companies, there is a better chance of getting a discount, he added.
“If you tell them, ‘I’m thinking about changing’ or you’re shopping around, it helps – if they know you’re thinking about leaving, they’ll give you the best rate, and the goal is now. Look for as much cash flow as possible,” she said.
Check out federal programs like the Low Income Home Energy Assistance Program, which helps cover bills, and Lifeline, which can help with phone bills. If you are not sure whether you qualify for a federal or state program, you can call 211, which will put you in touch with a local specialist who can assist you.
Switch up your groceries
Shopping for groceries with a meal plan, buying generic rather than brand-name products, or buying in bulk are some of the recommendations of the Consumer Federation of America.
“Most stores have price matching, so if you show them a competitor is selling the same product at a lower price, they’ll match that,” McCallister-Young said. “You also want to see stores near you, so you’re not spending extra money saving on gas.”
An alternative way to save money on groceries is to check out meal-sharing apps like Olio, which connects people in their community to share extra groceries, and Too Good to Go, where customers can buy businesses’ extra food at a discount.
Check out government assistance programs
Even with these saving and spending practices, a month’s wages are not always enough to cover important expenses. If this is your situation, there are programs available across the country to help you.
“Sometimes ‘month-end’ at the end of the month is not enough,” said Michael Best, an attorney with the National Consumer Law Center who works on financial services cases.
To use these resources, check to see if you qualify for the Emergency Rental Assistance Program, Supplemental Nutrition Assistance Program, Farmers Market Nutrition Program, or Homeowner Assistance Fund. All these are federal programs coordinated by state governments. Some states offer additional local programs for their residents.
Explore community support
If you are experiencing food or housing insecurity, look for nonprofits or community organizations in your area. From housing support and food banks to utility assistance, nonprofit organizations across the country can help. National organizations like Feeding America host food banks in all 50 states.
“We are already seeing the community reaching out to usBecause of what is happening in the country in terms of economic stability,” said Kavita Mehra of Sakhi for South Asian Women. Survivors in New York City.
Her organization provides housing, food, and cash emergency assistance for people in the community. She said that between January and June, her group distributed more than $150,000 in emergency cash assistance to survivors who are having a hard time keeping the lights on and food on the table. This is more than last year.
Food aid organizations such as Apple Harvest, Hunger Free America and Food Rescue US offer maps that allow users to find the nearest food bank by typing in their zip code.
Get some exercise and take care of your mental health
Worrying about bills and not knowing what your financial future looks like, your stress level can go through the roof.
“It’s a busy existence,” Gelian said. “You have to manage a lot, and you have to keep a big head, for your mental health.”
Debra Kissen, clinical director of Light on Anxiety CBT Treatment Center, recommends recognizing first when your body is stressed. Then she advisesSuch as breathing, touching a wall to calm yourself, and completing the “Five Senses for Anxiety Relief” exercise.
Both are also known to improve physical and mental health. Research from Iowa State University has also found that a little exercise can improve your mood, providing short-term relief for people with depression.
Most health insurance covers some form of mental health assistance. If you don’t have health insurance, you can find sliding-scale therapists around the country, including through FindTreatment.gov and the Anxiety and Depression Association of America directory.