As with many aspects of life, the unexpected can suddenly arrive, so planning for this is as much as possible is recommended. When it comes to your financial health, you want to do all you can to protect your money and ensure that during any unprecedented times you can still maintain your essential outgoings, such as a mortgage. Here are some quick tips on how to financially prepare yourself for a recession.
Seek Financial Help in an Emergency
Whilst it’s ideal to be fully prepared for any financial situation, sometimes you may still need financial help to get through certain circumstances. If you have a savings fund, you would normally rely on this to help, but when you don’t have enough savings built up yet, it doesn’t leave you with a lot of choices. If you have a short-term problem that can’t wait to be resolved, you can find loan solutions to help in an emergency anywhere from £1000 to £5000+. This can help during a difficult period whilst building your emergency savings fund for the future.
Reduce Your Debts
If you have existing debts, especially with multiple lenders, you’ll want to look at reducing them as much as possible. Those that are on fixed interest, such as a personal loan, should stay at the same repayment amount, but if you have credit card debt or those that accrue daily interest, it’s advisable to reduce these first as the amount you’ll pay will fluctuate. The reason to focus on reducing your debts is because if your income is affected by a recession, you may struggle to maintain them. Due to charges and the negative impact on your credit rating, avoiding falling further into financial difficulty can help you climb out of the effects of a recession quickly by having more money to spend on essentials.
Budget your Spending
Reviewing your expenditure against your income is the best way to discover any areas where you can cut back. You may find that a large portion of your income is going on miscellaneous items rather than going towards savings or existing debts. If you regularly wonder where all your money has gone each month, going through and budgeting your disposable income is the best route towards making your money go further. This way, if you are affected financially by a recession when it happens, you will have more available funds throughout the month due to reducing your spending habits.
If you discover that you have less than you thought after reviewing your income and expenditure, this could indicate the need to reduce other bills. You may have subscription payments you no longer need or can’t really afford to maintain. You may also be paying too much for utility bills, especially if you haven’t changed them in a while. Use comparison websites to discover better deals and reduce spending in this way.
Managing your money more carefully will go a long way to help deflect the worst of a recession’s impact. If you do suffer a job loss or are in current financial difficulties and not sure where to start, seek independent financial advice from Step Change or The Money Advice Service.
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