When times are good, it’s much safer to feel like you can build toward and invest in your future. However, the economy isn’t always so stable, especially with inflation, global conflict, and other factors impacting many financial decisions. But even when times are tough, there are still ways that you can give a boost to your finances. It all comes down to making sure you have a handle on your savings and finding help where you need it. Read on to explore strategies that may work for you to help boost your finances during troublesome times.
1. Revisit Your Budget
First and foremost, it’s time to jump back into the books and re-examine your budget. Even the most stalwart of budgeteers may find their spending slipping over time. As the economy becomes increasingly unstable, it’s important to make sure you can afford basic necessities. Clearly identify your spending on food, shelter, gasoline, rent, utilities, and any other regular bills. A proper budget is the foundation of your financial health, so pour all your efforts into making sure yours is sound.
There are tons of different budgeting apps and software available to improve the logistics of budgeting. They display your spending clearly, so you can trim it down in less important areas and bolster it elsewhere. You could also consider hiring a professional adviser to help you implement and maintain a personalized financial strategy. Keeping your bases covered is essential to surviving any economic downturn.
2. Strengthen Your Emergency Fund
No matter who you are or how much money you make, you should always have an emergency fund at the ready. If you don’t, there’s no better time to start building one than right now. An emergency fund is cash stored somewhere safe or money sitting in the bank for when things get tough. It’s money you can tap into immediately if you have a sudden medical complication or your paycheck vanishes. And with as many as 63% of Americans living paycheck to paycheck, it’s more important to build one now than ever before.
A basic emergency fund will hold enough money for you to survive a month of your current expenses. A good one will cover you for six months, and a great one will take care of you for a year. Once you make sure your budget is totally up to date, you’ll have a clear picture of how much you need. Start with small, regular contributions — tax returns, cash gifts, coins from cash purchases, and any percentage of income you can manage. It may be slow at first, but with a high-yield savings account, you’ll have some cushioning built up as the months pass.
3. Minimize Debt
At the same time you’re building up your emergency fund, you also want to break down outstanding debt. Many Americans are in debt, and the national debt continues to grow year after year. Debt can be crippling because interest and missed payments are a slippery slope. It may feel like chipping away at it over time is futile, as you may only be paying off interest. However, slowly paying off debt is one of the best things you can do for yourself.
When you pay off debt, even just a dollar at a time, you begin to build a habit of doing so. Economic downturns don’t last forever, and these good habits will help you later on. Your other financial habits of budgeting and building an emergency fund will help you persevere through more immediate adversity. And once you’re liberated from a paycheck-to-paycheck lifestyle, you’ll have more money to throw at any debt.
4. Diversify Your Investments
Investment opportunities may be an appealing way of improving your finances, as a good investment can increase your wealth multiple times over. At the same time, a bad investment can siphon money away from you, if you’re not careful. And one of the biggest mistakes you can make during an economic downturn is to put all your eggs in one basket. So it’s important to make sure that you’re diversifying your investments appropriately.
If you haven’t checked in a while, take a look at your current assets and investment portfolio and consider adapting it. You can use an investment adviser or robo-adviser to balance your portfolio in a more aggressive or conservative manner. Conservative investments are often in a plethora of more stable, traditional stocks, whereas aggressive ones are the opposite. But only invest once you’ve budgeted appropriately and have a sizable emergency fund in place. And, tempting as it may be, remember that your emergency fund is for emergencies and nothing else.
Strap In For The Long Haul
Economic uncertainty can affect everyone and can send ripples of chaos throughout society. In turn, this uncertainty can prolong this period of time and even lead to a full-on recession. No one knows how long economic difficulties will last, so it’s important to tend to the health of your finances. Focus on your foundations by budgeting, building an emergency fund, minimizing debt, and diversifying your assets and investment portfolio. A balanced, steady strategy will help you weather the storm.