By Ryan Wilcox
2. Make a recession-friendly budget
Next, review your monthly budget and cut any non-essential expenses. Focus on things you need like rent, groceries, and transportation, and cut spending on dining out and entertainment. (Many of these tips go hand-in-hand — spending less on things you don’t need will mean you can contribute more to your emergency fund).
Start by tracking what you spend now, then identify where to cut or scale back. Use a simple budgeting app, or even just a simple spreadsheet. The goal here is to stay flexible and keep money in your pocket for when you really need it.
3. Pay off your high-interest debt
High-interest debt, especially credit card balances, can become a massive burden during a downturn. Interest rates on credit cards can be 20% or higher, meaning your balances can grow fast and send your finances into a downward spiral.
Work to pay off these debts as soon as possible. Prioritize the highest-interest accounts first while making minimum payments on others, then slowly work your way down.
Another smart option: moving your balance to a credit card with a 0% intro APR. These cards offer 0% intro APR periods as long as 21 months. That’ll give you time to pay down what you owe without racking up more interest charges.
Check out one of my favorite balance transfer cards, with a long 0% intro APR on both purchases and balance transfers, to start saving today.
Stay ready so you don’t have to get ready
We don’t know where the economy is headed in the near future, but there will be another recession at some point — whether that’s in three months or 30 years from now.
Start by building your emergency fund so you have a buffer if your income takes a hit. Then, look for ways to trim your spending and create a budget that can handle a downturn. Finally, take aim at high-interest debt, especially credit card balances that can get more expensive over time.
These three simple steps can help you stay on sound financial footing — no matter what the economy does next.