The COVID-19 pandemic threw millions of American households into economic instability. People lost their jobs and had to shut their business’s doors. They had to quit to take care of sick relatives and children that couldn’t spend time in school. They had to cancel plans that they poured their finances into, from vacations to wedding ceremonies. Financially, it was a very difficult time.
Exiting the pandemic doesn’t seem like it will be easy on the average American’s finances, either. Financial experts are currently saying that the chances of an economic recession are high in the next year or so.
What can you do to prepare for this potential round of economic instability?
If you don’t follow a budget yet, you should start immediately. A budget is an excellent financial tool that can prevent you from spending beyond your means. The easiest way to start is to download a budgeting app on your smartphone or computer. The app will sync with your online banking, making it easy to calculate and track your income and expenses.
In times of economic uncertainty, an emergency fund can offer a lot of relief. It can help you stay afloat and pay for essentials in case of job loss or hour cuts. It can also offer relief on a smaller scale. When money is tight, a small problem like a car repair or urgent dental appointment can be devastating. An emergency fund will help you cover these surprise expenses immediately without dismantling your budget.
What can you do without an emergency fund? If you don’t have enough savings, you may only have a few options for covering the urgent expense:
- You could charge the expense on your credit card.
- You could see whether the service offers a payment plan. For instance, many plumbing companies offer payment plans for customers who can’t cover emergency repairs right away.
- You could apply for an emergency online loan.
When it comes to online loans, be sure to check their accessibility. Not every online loan will be available in your home state. So, narrow your search for loans accessible in your state. If you live in Phoenix, you should specifically search for online loans in Arizona – this should pull up options that may be available to residents of that state. You don’t want to waste time filling out an application for a loan that isn’t even accessible in Arizona. That will add more unnecessary stress to an already stressful situation.
Pay Down Credit Cards
Do you have high balances on your credit cards? You should try your best to pay them down as soon as possible. Why? These debts will add financial stress in times of economic instability. Plus, you’ll want to have all of that credit available in emergencies. You can always use your credit card to cover an emergency expense and tackle the balance later.
Ask for More
You could put more savings in your pocket and pay down your debts faster when you have more income. The job market is currently hot. Take advantage of this time and see whether you can get a substantial raise from your employer.
If you can’t get a raise, you might want to look for better prospects. There could be companies in your field offering much higher wages for the same type of work.
More difficult times could be ahead. You should follow these financial tips and get prepared.