If you spend two minutes reading the news, you’ll likely see headlines about stock prices falling or economic output decreasing. This article won’t be focused on trying to predict when the next recession will happen. What it will do, is help you make sure you’re ready when it does happen.
So let’s discuss the top things you can do to make sure your finances are in good shape if the economy falters.
Make Sure Your Loved Ones Are Taken Care Of
If you have children, a spouse or other family members who rely on your current and future earnings, you need to make sure you have adequate disability insurance and life insurance. If you have group disability insurance via your employer, make sure that the coverage is good enough. It’s often not. To make matters worse, if you have group disability insurance then you may lose coverage if you lost your job. Something that is not unheard of in an economic downturn. The same concern applies to life insurance you have through your employer.
Top Up Your Emergency Fund
If you’re worried about a volatile economy, one of the best things you can do is make sure you have 3 to 6 months of living expenses in a savings account. As Princeton Professor, Matthew Desmond, highlights in his book Evicted, without a home, everything else falls apart too. You don’t want to be in a position where you have to go into debt to get by, and setting money aside for an emergency is the perfect antidote.
Find Easy Ways To Cut Your Overhead Costs
We live in a day and age where having a good phone plan, solid WiFi, and plenty of content to watch on TV is a forgone conclusion. But that doesn’t mean you should overpay for it. If you pay more than $50 per person for a cell phone plan you should consider switching to a low cost phone carrier like Mint Mobile or Cricket Wireless. Another easy win is to identify big ticket purchases that you regularly make. For me, that is contact lenses. If you don’t wear contacts, perhaps your cable bill is begging to be trimmed down.
I love using TheStreamable.com to find the least expensive live TV streaming services. These recurring savings will add up over time and have literally saved me hundreds of dollars annually. Overall, one of the most important things you can do if you are living on your own is to live with a roommate to help offset your rent. You can save all of the money in the world on groceries and utilities, but if your rent is too high, you’ll sink quickly.
