When an economic downturn happens, it can have a significant impact on people’s lives. Financial hardship caused by a recession can affect your ability to meet basic needs like housing, food, and fuel. We all know that bad times won’t last forever, but what can you do if you’re facing financial difficulty?
Organize your finances
The first thing is getting your financial situation in order. Make a spreadsheet of your recurring payments (mortgage, utilities, bills, groceries, take-out, etc.). Usually take-out and recurring bills are the first thing you’ll be able to cut down. Depending on your bank, they may segregate your purchases automatically. If nothing obvious sticks out, divvy the categories up further. By drilling down, you may discover you’re spending a lot of more than you think you are on alcohol or Starbucks. You don’t need to stop, but dial it back.
Afterwards, make buckets of the average monthly costs of flexible spending. If doctors appointments are semi-regular, try to factor that into your budget.
You may find that you need to make some changes regarding your finances. This could mean taking a second job, getting another source of income, or reducing your expenses.
Stay out of debt
Credit card debt is particularly easy to get into, especially since it can cost next to nothing to get a credit card but many have high interest rates if you’re only paying the minimum due.
This could mean moving to a less expensive area, changing your living situation, or finding a cheaper alternative to the things you’ve been buying. There are many ways to avoid taking on debt when you are experiencing financial difficulties. For example, rotate streaming services and dial back the A/C or heat usage.
Don’t be an isolationist
Being an isolationist will only make your situation worse. During a recession, you may have the opportunity to reach out to others who are experiencing financial hardship. This can be a great way to make new friends and support one another through the recession.
You should also try maintaining your social connections and relationships with loved ones. Even those who are not struggling may have been there before and can offer some advice on what they did. This is especially important as unforeseen costs occur. If the lawn mower breaks, your first thought may be to purchase a new one, but that cost could go to any of the other categories — instead, borrow from neighbors or friends in the interim.
A recession can be a challenging time for many people. It can be easy to get overwhelmed by this and make poor choices. The best thing you can do if you are in a recession is to organize your finances and stay out of debt. You may also want to reach out to others experiencing financial hardship to support one another.