The Recession and Your Finances

Although we’re not officially in a “recession” it sure does feel like it. Gas prices are going up and down, the costs of groceries are higher than ever, and most people are too scared to check their 401k. Fortune 500 companies like Yahoo!, Google, and Lehman Brothers are laying their employees off left and right. Pundits on cable news shows warn us everyday of the failing economy and how it’s only going to get worse. In the meantime what exactly are we (the middle class) supposed to do to keep our head above water until things get better again? How do we prepare ourselves and our finances for the hard times ahead?

1. First and most important, is Job Security!  There is always a huge possibility that you can lose your job. Companies often times choose to cut back on operations when profit and sales lag, and employees are the first to go. It’s always good to be prepared, if you’re not 100% sure, put your resume out there. A great new site, Uboast.com allows you to market yourself through video resumes and personal profiles. Invest in yourself, you’d rather be safe than sorry!

2. Restructure your budget. Pulling back on your daily and monthly spending is a necessity. Cut out any unnecessary spending and start concentrating on your emergency fund. If anything were to happen, it’s nice to have a fund that you can count on to get you through at least 3-6 months of unemployment. If you don’t have an emergency fund, start one immediately!

3. Clean up your balance sheet.  Do not charge bills and shift payments during a recession, if you do, you’re heading for financial turmoil. The worse off the economy is doing, the higher your minimum payment will be on your credit card. If the interest on your credit card is high, consider shopping for a low interest rate that will allow you to switch your balance over.

4. Shop Smarter.  Although you should always shop smart, during a recession never spend more than you have to. Instead of throwing your neighborhood circulars away look through them carefully. Concentrate on finding good deals in your local grocery stores, dry cleaners, and surrounding businesses.

5. Consider All of Your Skills. Many of us get so caught up in our 9-5 jobs that we sometimes forget how much we have to offer in other fields. If you have other passions like writing, teaching, art, and music, explore them! There’s nothing like getting paid a little extra money for doing something you love.

Lastly, don’t be scared! Remember, history always repeats itself.  In recent times, the U.S. went through a recession in 1973, 1980, and 1991. Yes recessions do happen they’re painful, unfortunate, and tend to make people lose faith; however when they’re over, strong periods of growth and expansion arise. Keep the Faith!

~Mia

Tagged as: recession

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Mia