Inflation is at a 40-year high, with gas prices hitting $5 a gallon and everyday purchases becoming more and more expensive. Interest rates are rising. The stock market is taking us on a rollercoaster ride right now, terrifying drops included. Crypto is crashing, too. Some economists are saying the U.S. could soon be in a recession, if it isn’t already. I’m not sure about you, but it’s making me a little anxious.
This version of the original article by Alex Gailey (time.com/nextadvisor/) has been edited [ ] and abridged (…) to provide you with a faster and easier read. Also note that this complete paragraph must be included in any re-posting to avoid copyright infringement.
This is easier said than done and might sound a little crazy — but you should focus less on what’s going on in the actual economy and more of what’s going on in your own personal economy…That means following the same foundational principles you would normally to put your finances on solid footing, even if there’s a looming recession.
- Start with a financial plan — either continue following the one you have in place or put a new one together.
- have a budget.
- Avoid taking on excessive debt.
- Invest for the future.
- Prioritize building an emergency fund if you don’t already have one, so you have some cushion if you experience job loss or have to pay unexpected medical bills or expensive vehicle repairs. The amount of money you should have in an emergency fund is something only you can decide, but most experts recommend saving up at least three to six months of expenses. I’m taking advantage of the fact that interest rates are rising by opening a high-yield savings account to stash my emergency fund.
- Once you feel good about your emergency fund, prioritize paying down any high-interest debt…
- Find creative ways to make extra money. Building a side hustle, freelancing, or working a part-time job could all add extra security to your budget.
Recessions are all about weathering the storm. Since World War II, recessions have lasted an average of around 11 months, but usually by the time it’s officially announced, we’ve already been in it for six months.
While the word “recession” has been driving my anxiety up a notch or two (and maybe you feel similarly), I’m reminding myself that having a strong financial plan in place will help me get to the other side of the road.