Tips and Hacks to Save Money During Recession

Save an Emergency Fund

When the economy starts to dip, our jobs and our income can be put in jeopardy, and it’s for this reason that saving an emergency fund is crucial when you prepare for a recession. In a nutshell, an emergency fund is the money you’ve saved up for the sole purpose of helping you get through your day-to-day living during financial hardships.

Whether your hours have been cut back, you’ve lost your job, your business isn’t making any money, or you made some poor financial decisions, emergency savings will give you a safety net to fall back on so you can ride the wave and emerge from the recession back on your feet.

If it’s possible, try to save about 3 to 6 months’ worth of your wages, so when the economy is down and money is tight, you won’t have to turn to credit. Using credit as a safety net is a mistake that often haunts people for years after the fact. Most don’t foresee the reality that they will need a larger income than they currently have to both repay the money (plus interest) that they borrowed during the rough patch.

Tough times always last longer than you would think, so debts from these times are always greater than anticipated. Since most people are used to living on their entire pay check, they don’t have anything extra to repay this debt. So, they have to either increase their income or significantly downsize their lifestyle to afford repaying the debt at their current income level.

If you haven’t already started saving. Chances are, you won’t be saving money in a recession because you’ll have other matters to look after, so it’s best to start saving before a financial downturn hits.