During a recession, there’s no telling what can happen. At any given moment, a job could disappear or an investment could go south. With that in mind, it’s important to be especially careful about personal finances. The following 10 tips make it easier to get through a recession in one piece.
- Clip Coupons – Whether money is tight or not, it pays to save as much of it as possible. Using coupons is a great way to spend less at the grocery store. In addition to clipping coupons from circulars, shoppers can use electronic coupons and save even more.
- Pay Off Consumer Debt – Analyze unsecured debt and consumer debt. Identify the debt that comes with the highest interest rate and work on eliminating it first. Move on down the list until credit card bills and auto loans are paid off in full.
- Buy Used – From furniture to automobiles, buying used is a wise thing to do during a recession. If buying used isn’t an option, do plenty of research to pinpoint the best deal. In general though, it’s best to avoid buying anything at all.
- Slash Utility Bills – Cutting unnecessary expenses is one thing; to make it through a recession in one piece, it’s also important to cut costs across the board. As far as utilities go, adjusting the thermostat can make a huge difference. When new appliances are needed, energy-efficient models should be purchased.
- Be an Informed Buyer – Shopping around for certain things can pay off handsomely. Auto insurance is just one example. By collecting vehicle insurance quotes online, it’s possible to drastically reduce the cost of this unavoidable expense. The same thing goes for things like homeowner’s insurance, health insurance and even cable television.
- Pay with Cash – Credit cards definitely need to be avoided during a recession. Debit cards can be problematic too. It’s always best to use cash. When there’s not enough cash on hand to buy something, a person should save up for it and buy it with cash later. The goal is to avoid interest charges, which can wreak havoc on a person’s finances.
- Cut at Least a Few Unnecessary Expenses – Everyone has small, unnecessary things that they buy on a regular basis. Gourmet coffee drinks from popular chains are just one example. Identify a few expenses like these and eliminate them. Keep track of the money that is saved. It is sure to add up quickly.
- Analyze where Money is Going – Without knowing where money is going, it’s impossible to stay on top of personal finances. This can be done with computer programs, online programs or by hand, but it needs to be done on an ongoing basis.
- Improve Credit Scores – Free credit reports are available. People should check them regularly and work to polish their credit. When scores improve, it may be possible to refinance an auto loan or a mortgage to save even more money every month.
- Build a Cushion – Money should be saved whenever possible and kept in a high-yield online savings account. At the very least, the account should contain enough money to cover three months of living expenses. After all, there’s no telling what can happen in a recession, and it’s critical to be prepared for anything.
Pete Schilling is a writer for AutoInsuranceCenter.com who specializes in personal finance and insurance topics.