Recessions affect everyone in different ways, with investors losing out on gains and workers everywhere wondering if their salaries will hold up. Experts always say that there are ways to ride out recessions, but the advice often seems distant and unattainable. “Invest more” is usually the extent of it. What if you don’t have enough money to pay the bills, much less invest?
We wanted to go more in-depth into how to make money during a recession so you might have some simple yet actionable tips to keep yourself afloat during the next downturn.
- Pay off debt the smart way
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Most of us have some debt, and most of us have debt from different places, whether it’s from a student loan, a car payment, a mortgage, or a credit card. The trick to paying off debt in a recession is to figure out which debt has the highest interest and prioritize those payments. Even if you can’t consolidate your payments, you can make payments on the debt that’s draining you the fastest.
- Fight for stability
Your earning power is important. During a recession, it’s a lifesaver. If you lose some or all of your primary income, you’ll lose your ability to invest. You’ll start falling behind on your payments. So you need to fight for stability, whether that means switching employers, getting a second job, changing careers, getting a new certification, or taking up a side hustle.
- Prioritize your savings
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If you budget your expenses (and you should), then you should probably re-budget for the new financial conditions of a recession. This means re-examining your budget for extra fees you don’t need, like multiple streaming services and restaurant bills. Then, you need to try to keep what you save. Experts say that your emergency savings should sustain you for at least 12 months, assuming you get laid off completely. Try to work up to that by cutting back anywhere you can.
- Ask for help
It may be inevitable to ask for help during a recession. Help comes in many forms. You may need to borrow from family or a lender, meaning you’ll have more payments to worry about. But there are other ways of expanding your options. You could renegotiate your mortgage, call a bill negotiation service, or even get a roommate to pad your living costs.
- If you have anything left, invest
Finally, invest smartly with whatever you have left for added security. During a recession, stocks drop dramatically, which is a great time for new investors to buy at a discount. Try to find less risky investment opportunities like CDs, a 401k, or gold/silver investments. Anything that holds its value and has little chance of blowing up is your best friend during a recession.
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Recessions can take a huge chunk out of our hard-earned net worth. At times, a recession can cost someone their whole salary. But these tips can help you stay afloat during troubled times. By paying off the right debt, prioritizing the right expenses, saving when you can, and investing where you should, you can win the fight for stability against a stubborn economy.
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