You need financial management tips right now. Back in 2019, 3 out of 4 economists were expecting the recession to happen by 2021. But with the pandemic making everything spiral out of control, it’s pushed the schedule a little bit earlier.
The truth is, we’ve been warned of this recession for a few years now. They said it was bound to happen. But the economy, thanks to consumer spending and various factors, have held out long enough to delay it.
Now, that is no longer possible.
Based on the latest news, the country is already in recession. In fact, the 2nd quarter is expected to have a 26.5% contraction in GDP. While it’s scary that we are finally starting this, economists are not really that scared. That’s because people will continue to spend. And for an economy that is reliant on consumer spending, this can help us recover.
But what about our personal finances? People are getting unemployed because of the damage brought about by the pandemic and recession. How can we rely on consumer spending to revive the economy?
It will be hard. But it is not impossible. After all, we have to pay for the things we need to survive. Even if we don’t have the money to spend, we will have to find a way if we want to feed our family.
And that thought is the reason why you need financial management tips right now – more than ever.
Financial management tips before the recession
This recession should not have come as a surprise. And we should have prepared for it. But even if you have yet to make preparations, don’t panic. There is still time because the recession has yet to come full swing. Even just a month or so can give you enough time to strengthen your finances. But you have to act now, especially if you still have a job.
What do you do?
Boost your emergency funds
The first thing you do is to look at your emergency funds. How much do you have? The answer to this question will determine the extent of the preparations that you need to make. If you don’t have enough, you need to work double-time to boost it. You have to save as much as you can in the shortest amount of time possible. The more money you have in your emergency fund, the more secure you will feel about the future.
Diversify your income
The next thing that you have to immediately do is to find ways to diversify your income. You need to increase your income to help boost your emergency fund anyway. But this will also give you another layer of security. If you haven’t lost your job yet because of the recession, you don’t have to worry too much. Even if you get laid off, you still have another source of income to rely on.
But what can you do? With unemployment rising, where will you get an additional income?
You can start by looking online. With the call for lockdowns early this year, more businesses have started to realize the importance of bringing their business online. Even those that heavily relied on a brick and mortar establishment was forced to do online transactions. There are a lot of job opportunities here if you are determined enough to find one.
You can also think about renting out a part of your house – if you own it. People will be losing their homes in the process and moving to a small space to rent will make things easier for them while they recover. Of course, there’s more to it than that but it is a great option if you choose to use it.
Pay off your debts
You may not have enough time to be debt-free by the time the recession peaks but you might as well pay as much of your debt as you can. This may be one of the financial management tips that are far from your mind, but it will help you a lot. At the very least, try to meet your payments as usual. This will lessen the burden that you have to face when things go really south.
Of course, if you don’t lose your job, all is well. You can continue to pay your debts as usual. But it’s advised that you don’t stop payments until you have no means to do it anymore. At least, not without coordinating with your creditors or lenders. Recession or not, you still have an obligation to pay off what you owe.
Live below your means
Finally, you need to start living below your means. The moment you caught a whiff of the financial crisis, you should have started doing this. The truth is, if you want to improve your finances, it’s not enough to live within your means. You have to live below it. That way, you have enough extra money to improve your finances. You can use it to save up and increase your emergency fund. Or do something that will make sure your finances can survive the crisis.
Besides, this will be a great practice for you. Once the recession happens and you lost your job, you need to live on a smaller budget. It’s better for you to start doing it as soon as possible so you don’t have to make a huge adjustment.
Money management tips once the recession hits
Now the financial management tips will not change a lot once the recession hits. But you need to be more aggressive with your efforts. Here are the things that you need to do once things get worse for the economy.
Live way below your means
If you had been living below your means. You have to take that up a notch. You have to live way below your means. At this point, you probably have gotten used to living below your means. You can probably cut back on your spending some more. Doing this will help you stretch your finances so it will last longer. This is especially true if the recession caused you to lose your job. But even if it doesn’t, try to make an effort to lower your spending. That way, in case things turn even more for the worse, your finances can handle it.
Take care of your debts
Another thing that you can do is take care of your debts. You need to call your creditors and lenders to negotiate your debts. Tell them about your financial situation. Assure them that you plan to meet your payments – but you need them to make it easier for you. Either they lower your monthly payment or have your debts reduced. They can also waive any penalty fees or other charges.
Once you have set up a new and more affordable repayment plan, you should also make a commitment to avoid debt. Try to stick to using cash for now. You don’t want the interest rate of the debt to make things worse for you. But if it can’t be helped, make sure the debt will not cost you in terms of high-interest rate.
Know where to get help
The last of the financial management tips that you need to apply involves simple research. You need to know where you can get help. Sometimes, getting out of debt can be tough. You need to know how to make it easier. Most of the time, creditors and lenders are ready with programs that will make payments more affordable. You need to research if there are laws from the government that will help borrowers like you.
You should also find out where you can get financial support. During the recession, the government provides financial aid and stimulus packages that will help those affected. This may be something you can tap into.
Use these financial management tips to help yourself survive this recession. This will soon come to pass. But until it ends, make sure it will not destroy your finances too much.