With the current economic uncertainty, you might be worried about how to protect your family if a recession occurs. While there is little you can do about the economy, you can pay attention to your spending, manage your debt wisely, and increase your income to help ensure your family's financial stability.
1. Stick to Your Budget
Creating and following a household budget allows you to manage what you spend while encouraging saving. Calculate your fixed and variable reoccurring expenses to determine what you have left each month for additional purchases.
Shop smart by comparing costs, reading reviews, and checking ratings when buying a new product. This can help you find quality options within your budget to get the best value for your buck. Making a habit of comparing prices can save you a lot of money in the long run.
Another idea is to save a portion of your income each month. Treat your savings account like a monthly bill, and never miss a payment. By prioritizing savings, you can ensure your family has additional funds for an emergency.
If you’re having trouble managing your budget, turn to the expert coaches at Turning Point Stewardship!
2. Reduce Your Debt
While you may not be in a position to pay off your debt entirely, you can be strategic when choosing how to allocate your financial resources. If possible, eliminate small balances while prioritizing your highest-interest debts. Maintain organized financial records to minimize confusion and keep track of your debt repayment progress.
Financial records can be confusing, but digitizing your documents allows you to conveniently access and review them. Storing copies of account statements and payment receipts in a single file helps you stay organized while managing your debt.
3. Invest in a Home Warranty
A home warranty is a type of insurance that helps to cover the cost of repairs for items in your home, such as your furnace, air conditioner, plumbing, and electrical systems. Many people choose to purchase a home warranty when they buy a new home, as it can provide peace of mind in knowing that these expensive items are covered in case of breakage. To determine whether a warranty is worth it when buying a new home, consult the home’s inspection report.
A home warranty can also be beneficial if you own an older home, as it can help to offset the cost of repairs or replacement for items that are starting to show their age. In either case, a home warranty can help you save money by covering the cost of repairs that you would otherwise have to pay for out of pocket.
4. Consider Gig Work
With the rise of the gig economy, there is more opportunity than ever to earn additional income. Ride-sharing, grocery or food delivery, and dog walking gigs allow you to connect with people willing to pay for these services. If you are tech-savvy, there are countless opportunities to make extra cash with just your computer and an internet connection, including:
5. Start a Recession-Proof Business
Another way to diversify your income is to start a business. While launching a new company is often costly and time-consuming, investing in a recession-proof industry can provide a steady stream of revenue regardless of the state of the economy. Popular recession-proof business ideas include:
Investing in one of these in-demand businesses can be profitable and fulfilling. According to experts, online-based businesses are easy to launch and require lower initial costs than those requiring a brick-and-mortar storefront.
Whether you get a side hustle or start a recession-proof business, having diverse sources of income is a benefit. Exercise wisdom and planning when managing your finances and consider investing in a home warranty. Economic uncertainty can be frightening, but preparing for a recession eases financial stress and provides valuable peace of mind.
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