With looming economic uncertainty and inflation on the rise, you might need a few extra financial tips in your arsenal. Stay on top of your finances by heeding the following advice.
Pay Off Debt
When things look bleak in the economy, having a large amount of debt is not great. Always be looking into ways to pay off your debt as quickly as possible. Start with the high interest debt. Prioritize debt payoff before you start investing. Make it your goal to pay off as much as possible to give yourself more breathing room in terms of finances. Don’t get yourself into a bad spot with borrowing. It will add a significant amount of stress to your life.
Bulk up Savings
Another way to set yourself up for success with a recession on the horizon is to ramp up your savings. Ideally, you should have 3-6 months of expenses stashed away in your savings. This gives you a comfortable buffer in the event that you or your partner lose their job. Having extra money saved up will also serve as a cushion for you in case of an emergency. For example, if someone in your family has emergency medical expenses pop up, you won’t have to go into immediate debt to pay for their care.
Prioritize Budgeting
You won’t get far with finances without a budget. An article written by Bola Sokunbi for clevergirlfinance.com states, “Living within your means is the key to building wealth. It also means you eliminate having to leverage debt to live your life—no more using credit cards to pay your bills. Learn how to budget and determine what budgeting style works best for you. Your budget will help you track your expenses compared to what you earn and highlight areas you can cut back on.
Your ultimate goal should be to widen the gap between your income and expenses as much as you can. You do this by increasing your income and reducing your expenses. The money you have left over is money you can use toward the things that really matter to you, like your savings and investment goals.”
Multiple Streams of Income
The average millionaire has 7 streams of income. With multiple sources, you’re essentially guaranteeing that you’ll always have money coming in. You can do this in a number of ways. First, develop passive income streams. Passive income is money that comes in every month without you having to work (too hard) for it. This might look like a rental property, selling digital products online, or investing in things like REIT’s (Real Estate Investment Trusts).
Find a Recession Proof Job
When choosing a potential career path, it’s helpful to think about the jobs that are virtually recession proof. For example, healthcare workers, teachers, pharmacists, etc. are just a couple jobs that are pretty immune to recessions. Do your research when looking into potential careers!
Use this advice to help you weather the financial storms ahead.