Saving for a Recession
When fighting your way through tough economic times, it is better to try and face down these money troubles instead of closing your eyes and hoping they’ll go away. They won’t. The economic downturn is not over yet so if you’ve not prepared it’s not too late but you need to start now.
Accumulate funds for emergency savings. In an emergency your going to need money in a hurry so a savings account allowing easy, penalty free access to funds for unexpected costs is a must. As a general rule its good to have enough in your savings to survive without an income for around three months. The best place to park this money would be in a high interest savings account.
Increase Your Savings. Try to arrange for an automatic savings plan. This arrangement enables you to set aside specific amounts of cash automatically transferred from a checking account to savings accounts earning high interest or to a mutual fund of your choice. A high interest savings account should be used but you should choose one with easy access. A retirement fund will not do it because this is money you won’t need for quite a while.
Spend less. This move may be obvious, but it can be a very hard step to take. Lump into one account all the phones at home (landline and mobile). By bundling your communications you can normally receive worthwhile discounts. You should do a comparison of the deals available to select the best value deal. Spend less on your weekly grocery bill by choosing supermarket own label brands, going to markets or joining a local food co-op. Save on motoring and join a car pool or use public transport. If you have two cars and one is seldom used, consider selling the other one. Put all the money you save in a savings account intended for the rainy days.
Lower your credit card debts. You have to find ways to stretch your money further in tough times. It does not make sense to shell out your hard-earned money to pay 17 per cent (or whatever) interest on debt from credit cards. Try to pay off in full the balance due each month; if that is difficult, at least pay much more than the minimum amount. Consider moving from credit to a Visa debit card
Increase household income. This could be tough to do during the recession. You may be able to find creative ways of bringing in extra funds using your skills. If you write, or do photography, or are able to do some other marketable skills, you can try freelancing on your spare time. In single income households the partner could try and take on casual or one off jobs for extra income. You could start a small business which might blossom into something bigger once the recession is over.
Utilise allowable tax deductions. Be on the lookout for tax deductible expenses such as education, charitable donations and your home office. Be religious about keeping every related receipt, so you can use these to support tax deduction claims. Put the money saved on personal tax deductions into your high interest savings account.
Revamp your resume. Recessions can lead to more layoffs. It is best to polish the résumé to make it current, in case the need to apply for a new job arises. Condense the résumé to one page, as much as possible. Make it presentable, but not flashy. Highlight your relevant work skills and experience.
Act quickly to protect your finances from the recession. This will give you a strong sense of purpose even as it shores up your position.