You work hard, make smart decisions with your money, and save carefully. In a perfect world, that would be all it takes to ensure your family’s financial security. In reality, though, circumstances outside your control can lead to unexpected challenges.
This is especially true when it comes to a recession. That’s when our economy starts to shrink, causing some businesses to struggle or close and potentially leading to hardships like job losses and home foreclosures. For many of us, these effects hit close to home just a decade ago, during the Great Recession.
Recessions are a normal part of an economy, and they’re usually not as bad as the one in 2007-09. In fact, a recession may have very little effect on your day-to-day life. All the same, it’s important to understand how an economic downturn can potentially affect your finances, such as through a job loss or hit to your retirement savings. These recession-planning tips can help you stay prepared.
1. Keep Your Career on Track
Think about how secure your job is, and how vulnerable your employer would be in the event of an economic downturn. Even if you feel optimistic about your future at your current job, it’s never a bad idea to keep your resume updated, network with others in your field, and pursue additional training or certifications to become a more valuable prospect if you’re ever back in the job market.
2. Boost Your Emergency Savings
The loss of a job can cause a big financial strain for you and your family, and the resulting stress could make it harder to find work. It’s a good idea to have an emergency savings fund of three to six months’ expenses on hand in case of emergencies like the loss of a job. Keep these funds in a savings or money market account where they’ll earn competitive dividends and be readily accessible.
Need to build your emergency fund? Make some changes to your daily life to help you start saving and grow your savings faster.
3. Plan & Budget
Sticking to a budget is obviously important when times are tough, but it’s also a smart idea when things are going well. Having a solid spending and savings plan now can help you save more and be better prepared for financial emergencies.
At USE Credit Union, the Money Management tool in our Mobile Banking App makes it simple to track all your accounts and spending, create a monthly budget, and set savings goals. It also makes it easy to see where your money is going and find ways to spend less, such as by canceling a subscription service you rarely use or dining out less frequently.
4. Make Debt More Manageable
Paying off or refinancing debt is a great way to lower your monthly expenses. You can use our Money Management tool to create a plan to tackle debt. You may also be able to save money by refinancing your existing auto loan by switching to a lower-rate loan or transferring high-interest credit card balances to one with a lower annual percentage rate, like USE Credit Union’s Platinum Mastercard®.
5. Think Long-Term
Sometimes, long-term plans come with a major price tag. Maybe you want to go back to school, start a new career, move across the country, or begin retirement. It’s a good idea to factor in both your financial needs and your timing when making big decisions or setting goals. By no means should an uncertain economy stop you from pursuing your dreams, but it may influence how and when you choose to pursue these goals.
6. Protect Your Long-Term Savings
Investing in the stock market is an important way to grow your retirement savings and earn bigger returns than you’ll find with a typical savings account. But it also comes with far more risk.
If you’re looking to keep your savings protected from market volatility, a federally insured savings option like a Term Certificate may provide the peace of mind you want, along with guaranteed earnings for the whole term. Also available for IRAs, they’re a great way to support your retirement planning and help protect your nest egg.
Here Today, Here Tomorrow
At USE Credit Union, we’ve served our members through a Great Depression, a Great Recession, and plenty of other ups and downs. All the while, we’ve provided members with the stability and quality financial solutions to support their day-to-day needs and biggest dreams.
Visit a branch or explore our website to see how we can support yours.