4 Smart Money Moves to Make During a Recession

Sometimes I wish we could go back to the ‘simple’ times of barter trade.

Between moving to a different continent and losing one of my biggest clients just before the most expensive holiday season; I thought my finances were bound to take a dip but would soon get back on track.

Sadly, it didn’t take long for me to realize that I might be in a financial crisis for a bit longer than I had anticipated. 

Being the curious individual I am, I took on a further interest in the economics world and then realized that I am not alone. The cost of living is skyrocketing and it looks like we might be going through a recession (I hope not as bad as 2008 one). 

A lot of people are struggling to make ends meet and below are some tips that might help you get through this tough patch.

4 Ways to Financially Prepare For a Recession

Make your dollars stretch. 

While the cost of everything around us is increasing, the last thing that will change is usually your salary. It almost always never seems to catch up with the expenses. While we wait for that to happen, the best you can do is improve how much further your dollar can stretch.

In some cases, you might need to change the food brands you buy. There are some excellent quality food brands that are cheaper, so don’t be quick to write off something simply because it is cheaper.

When you buy one cheaper product and save a few cents, it might not seem significant but remember, those cents add up and at the end of the month you might realize that you have saved a bit more than you could imagine on groceries. 

Make use of loyalty cards. Most stores now have these and each seems to work a bit differently. Some give you points that can later on be redeemed as cash and used towards your next shopping while others simply give you a lower price when you have the card.

If you document your expenses, you might realize that this will help you spend less on your shopping. 

Plan your meals.

In an attempt to rescue yourself from this horrible financial pit, you might find yourself working longer hours or even picking a second job. The change in your work-life balance means you will not have enough time to cook, let alone think about what to cook.

As a result, you might turn to store-bought precooked meals or takeaways.  

Here I will not go on about the extent to which this diet can be healthy, rather I will focus on the financial impact. These ‘convenient’ meals tend to cost way more than a meal we make at home and that extra cash could be used towards something else. 

So, next time you plan your schedule for the week, consider going a step further and planning your meals as well. This means you can do the required precooking on time and you will not get stuck in the loop of deciding what to eat every single day.

Planning meals in advance will in turn reduce your chances of buying takeaway, meaning less money will be used on food. 

Get rid of your high-interest credit card.

When you have a credit card, your main job is to pay it off as soon as possible.

If there is a global financial crisis, interest rates will likely increase rapidly, meaning you will have to pay more. Should you have multiple cards, getting rid of the ones with the highest rates first will make a difference to your financial status. 

In a case where you are unable to pay off all your debt, you can explore other ways such as a credit card balance transfer or consolidating your debts into one place that might help you lower the interest rate. 

Consider getting another source of income.

I understand the importance of having a good work-life balance. We aren’t our jobs and there is a need for us to have a life outside of these jobs. Sadly, these jobs give us the ability to pay for all our necessities and luxuries, and sometimes the money we get from them is simply not enough. 

With the increasing cost of living, there might be a need for you to consider getting a side gig. With freelance working on the rise, there is a possibility of squeezing in a few extra hours a day to make extra income.

Also a lot of companies are considering hiring freelancers in comparison to traditional employees, so getting a side gig might not be as hard as it seems.  

Moreover, with the significant layoffs happening at large tech and media companies, it feels like I am always on the edge. While I hope for the best, having a side gig allows me to prepare for the worst because should I get laid off, I would have saved a bit of money and will have another source of income to fall on. 

A Recession Won’t Be The End of The World

Considering the recent Covid pandemic, the possibility of a recession is not a surprise. High interest rates, increase in gas prices and high inflation are some of the signs that we need to do something and prepare for the worst.

The intensity of a possible recession is still unclear, but there is no harm in being prepared for anything. Making small changes to how you live your life might help you adjust to the changing financial situation. 

Don’t be shy to carry a packed lunch to work, use public transport, cut down on your subscriptions or go to a less fancy holiday destination. You have a life to live and bills to pay not a community to impress.

It is your responsibility to create a life that the future you deserves. Do what makes your life more comfortable in the long run.

Moreover, as we go through such a challenging phase, it is okay not to be okay and remember that recessions don’t last forever. 

Photo by Karolina Grabowska

If you want more advice or knowledge about your finances to give yourself more options, head over to our sister site at Daily Finances.