Recently, economists have revealed that Covid-19 has caused the worst recession the United States has experienced since World War II. Millions of people are out of work and plenty of others have concerns about their finances and the ability to get through it.
Whether you’ve recently lost your job or want to make sure you and your family are secure from a financial perspective, read on about how to survive a recession.
1. Take Advantage of Assistance Programs
There are a variety of assistance programs to help people survive an economic downturn. If you’ve recently lost your job, don’t wait to apply for unemployment benefits. There are also programs like SNAP (Supplemental Nutrition Assistance Program) that can help you get groceries.
It’s a good idea to look into these programs as soon as anything happens. Knowing what’s available will reduce your stress. You’ll also be aware of your options and can take action sooner for yourself and your family.
2. Reduce Your Expenses
It doesn’t matter if you’re unemployed or still have a job. Either way, now is the time to reduce your expenses.
Spending less while you’re looking for a new job will help you stretch your dollars a little further and ensure you have enough to cover necessary costs (rent, utilities, groceries, etc.). If you spend less while you also have money coming in, you can pay down debt faster and/or put more into your savings account so that you’re more comfortable if anything unexpected happens.
Go through your bank statements from the last couple of months and look at your spending. Where can you cut back? Do you need to get rid of your subscriptions or stop eating out as often? Work together as a family to decide what you’re going to do to save money.
3. Assess Your Future Plans
Now is a good time to assess your plans for the future, too. Were you planning on making any big purchases (upgrades to your home, a new car, etc.)? If so, you might want to plan those more carefully. Consider your current situation and ask yourself how moving forward with those plans could affect your finances.
Also think about your plans for the future when it comes to your living situation. For example, is your lease going to be up soon? If so, does it make sense to downsize and move to a smaller apartment or house so you can save money on housing?
4. Start Building Your Savings
In an ideal world, you’d have enough money in your savings account to cover your bills for between three and six months. If you don’t have enough saved for this, start focusing on adding money to your savings account. This is especially important if you’re still working.
You might even want to consider picking up a side gig. Delivering food for GrubHub or groceries for Instacart will help you bring in some extra cash that can go right into your savings account. Selling items online is another option that you can use to give yourself a bit more of a cushion.
Check out Thinkflow’s Income Helper for lots of ways to earn extra cash. That could be your key for how to survive a recession.
5. Maintain or Improve Your Credit Score
Let’s say you lose your job and find yourself in an emergency situation (someone needs to go to the hospital or your car breaks down, for example). You might need to take out a loan to cover that emergency. If you have a low credit score, you might have a harder time qualifying for that loan.
This is why it’s important to start working on improving your credit score now. Make it a priority to pay down your debt and make sure you’re paying your bills on time so that, if you do need a loan or line of credit, you can get one right away.
6. Update Your Resume
Even if you have a job and feel secure in it, it doesn’t hurt to update your resume. If you do so now, it’ll be easier for you to start distributing it and applying for new jobs in the event that you get laid off.
Sit down and update your LinkedIn profile, too. This will help you find jobs online and ensure you’ll be ready to job hunt if you have to.
7. Develop New Skills
Most of us are spending more time at home than usual these days. Since you’re not able to go out and do other things, why not dedicate some of your newfound free time to learning a new skill?
There are lots of free courses out there that can help you learn basic coding and other skills that will make you more marketable should you find yourself applying for a new job in the future. (add link if possible)
8. Play the Long Game
An economic recession is not a great time to be taking risks with your finances. Be conservative with your investments and avoid acting on emotion when making any money-related decisions.
Keep a cool head, be patient, and play the long game. If you’re considering taking any kind of action with your finances, like withdrawing money from a retirement account or buying a new house, talk to your family or someone you trust beforehand. This could save you from getting into difficult situations because you were trying to solve money issues as quickly as possible.
You Know How to Survive a Recession: Now What?
It’s understandable to be worried about finances during a recession.
The good news is there are steps you can take to prepare finances for a recession and minimize the damage caused by Covid-19. Keep these tips on how to survive a recession in mind and you’ll have an easier time making it through.
If you need more help managing your money, we have even more resources on our blog. Here are 8 common financial mistakes to avoid during the pandemic (or any time, really!).