NEW YORK • Gas, food and rent prices are on the rise. The Federal Reserve raised interest rates to the highest level since 2018. The US economy shrank for two consecutive quarters.
Economists are divided on whether a recession is looming. What is clear is that economic uncertainty will not go away anytime soon. But there are steps you can take now to be ready for whatever happens.
Yiming Ma, an assistant professor at Columbia University, says it’s not a question of if but when a recession will occur. People should prepare but not panic, she said.
“Historically the economy has always been up and down,” said Ma. “It’s something that just happens, it’s kind of like catching a cold.”
But, he notes, some people’s immune systems are able to recover better than others. It’s the same with finances. If you think a recession could destabilize yours, here are some things you can do to prepare for it.
KNOW YOUR EXPENSES AND MAKE A BUDGET
Knowing how much you spend each month is essential. But he recommends that you sit down and write down how much you spend on a day-to-day basis. This will help you see what’s coming, what’s coming out, and what unnecessary expenses you might be able to cut.
“By understanding what money you are getting and what you are spending, you may be able to make adjustments to help you through difficult times,” advises Federal Deposit Insurance Corporation’s Money Smart, a financial education program.
Budgets often reveal expenses that can be eliminated altogether or impulsive expenses that can be avoided with planning.
For guidance on creating a budget, free courses like “Create a Budget (and Stick to It)” from CT Dollars and Sense, a partnership of Connecticut state agencies, and Nerd Wallet’s Budget Calculator can be good places to start.
SAVE AS YOU CAN
The more non-essential expenses you can cut, the more you can save.
It’s not possible for everyone, but Gene Natali, co-founder of Troutwood, an app that helps people create financial plans, says it’s ideal to plan enough savings to cover basic needs for three to six months.
Programs like America Saves, a nonprofit campaign from the Consumer Federation of America, can help create a roadmap.
And if you have a savings account, it’s important to check if your bank offers you a good interest rate and shop around if not, Ma said.
His advice is to keep an eye on monthly fees or service charges that could dent your savings. But don’t limit your options. Online banks sometimes offer better rates than traditional ones.
CONSOLIDATE YOUR LOANS AND DON’T TAKE ANY MORE
As interest rates rise, experts recommend consolidating loans so that you have only one fixed-rate loan and, if possible, pay off as much of the debt as possible.
“Job security tends to worsen when a recession comes, it’s not a great time to build up debt,” Ma said.
But paying off existing debt is easier said than done. The Federal Trade Commission Consumer Advice Guide to Getting Out of Debt can help you make a plan.
With high interest rates, it’s not even a great time to take out new loans for big expenses like cars, although experts advise that if you need durable goods like vacuum cleaners, stoves or dishwashers, buy them as soon as possible to avoid. future price increases.
VISIT THE SECOND-HAND STORES AND SITE SALES
Allen Galeon, a home caregiver in California, has been affected for months by rising prices for basic necessities like groceries, paper towels, and gas for his commutes.
Her son’s favorite Hi-C orange juice, which used to cost $ 1.99 for a six-pack, now costs $ 2.50.
Since the start of the pandemic, when Galeon reduced the care of multiple families to a single client to reduce his health risks, his family has faced financial instability.
One choice he has made is to buy items such as clothes or second-hand electronics whenever possible, from Goodwill, pawn shops, or Craigslist. And Craigslist allows you to search by area, reduce driving, which means less gas and inconvenience.
NEGOTIATE YOUR MONTHLY BILLS
After the pandemic, many companies updated their relief policies and became more flexible with users, according to Kia McCallister-Young, director of America Saves.
Calling monthly service providers to negotiate bills – whether it’s for utilities, phone services, cable, Internet, or auto insurance – can lead to significant savings, McCallister-Young said. Individuals can request the best rate, any discounts, rebates, or coupons available which may lead to a reduced monthly rate. If a supplier is competitive with other companies, there’s an even better chance of getting a discount, she added.
“If you tell them, ‘I’m thinking of a change’ or you’re shopping, it helps: if they know you’re thinking of leaving, they’ll give you the best rate and the goal right now is to find as much cash flow as possible,” he said. said.
Check out federal programs like the Low Income Home Energy Assistance Program, which helps cover bills, and Lifeline, which can help with phone bills. If you are unsure if you are eligible for any federal or state program, you can call 211, who will put you in touch with a local specialist who can assist you.
TURN ON YOUR POWER
Shopping with a meal plan, buying generic rather than branded products, or buying in bulk are some of the recommendations from the Consumer Federation of America.
“Many stores have matching prices, so if you show them that a competitor is selling the same product at a lower rate, they’ll match it,” McCallister-Young said. “You also want to look at the stores closest to you, so you don’t spend the extra money you would save on gas.”
An alternative way to save on groceries is to check out food sharing apps like Olio, which connects people in their community to share extra food items, and Too Good to Go, where customers can shop with one. discount the excess food of companies.
SEE THE GOVERNMENT’S ASSISTANCE PROGRAMS
Even with these savings and spending practices, a month’s salary isn’t always enough to cover major expenses. If this is your situation, programs are available across the country to assist you.
“Sometimes there isn’t enough ‘end of the month’ at the end of the month,” said Michael Best, an attorney at the National Consumer Law Center who deals with financial services issues.
To use these resources, check if you are eligible for the Emergency Rental Assistance Program, Supplemental Nutrition Assistance Program, Farmer’s Market Nutrition Program, or Homeowner Assistance Fund. All of these are federal programs coordinated by state governments. Some states offer additional local programs for their residents.
SEEK COMMUNITY ASSISTANCE
If you are experiencing food or housing insecurity, look for non-profit or community-based organizations around you. From support for housing and food banks to assistance for public services, non-profit organizations across the country can help. National organizations like Feeding America host food banks in all 50 states.
“We are already seeing the community contacting us in overwhelming numbers because of what is happening in the country in terms of economic stability,” said Kavita Mehra of Sakhi for South Asian Women, an organization that helps survivors of domestic violence to New York City.
His organization provides shelter, food, and cash emergency assistance to people in the community. She said that between January and June, her group distributed over $ 150,000 in cash emergency assistance to survivors who were having difficulty keeping the lights on and putting food on the table. This is more than anything last year.
Food assistance organizations such as Ample Harvest, Hunger Free America, and Food Rescue US offer maps that allow users to search for a nearby food bank by typing their zip code.
TAKE CARE OF YOUR MENTAL HEALTH
Between worrying about your bills and not knowing what your financial future might look like, your stress levels can skyrocket.
“It’s a hectic existence,” Galeon said. “You have to do a lot of gestures, and you have to stay calm, for the sake of your mental health.”
Debra Kissen, clinical director of the Light On Anxiety CBT Treatment Center, recommends recognizing first when your body is stressed. She then recommends mindfulness exercises such as breathing, touching a wall to calm you down, and completing the “five senses to relieve anxiety” exercise.
Most health insurances cover some types of mental health care. If you don’t have health insurance, you can search for therapists on a sliding scale across the country, including through FindTreatment.gov and the Anxiety and Depression Association of America directory.