An economic recession may be on the horizon. Much of America’s economy is mirroring the great recession of 2008. Many Americans are fearful of what a new recession could mean for their finances, so how should people prepare for it?
The first method of preparation is tried and true saving. Building up an emergency fund will make it so that a recession doesn’t change your circumstances too much.
The goal is not to have to resort to debt in the case of job loss or higher prices on goods and services.
But what if you have some debt already?
Pay off your credit card debt as soon as possible. A recession on the way means that interest rates could rise rapidly.
A great way to lower your current debt rate is by calling your credit issuer and asking for an interest rate reduction. According to the Washington Post, about 70% of people who asked got a lowered rate in 2021, but few people ask.
Taking up a side gig could help build savings quickly also. Multiple income streams can help build an emergency fund or pay off debts quickly before a recession occurs.
Now is the time to prepare – even if we avoid a recession, being better prepared for it can help save us from financial disaster.