With recession anxiety at an all-time high, many Americans like you are searching for ways to fortify their finances. “But there are so many things out of my control,” you may be thinking. From unemployment to the stock market, where can you even begin to protect yourself? We put together a few steps that will set you on the right course, no matter what tomorrow brings.
5 ways to prepare your finances for a recession
1. Trim your budget
Review where your money is going and if there’s any spending categories you could cut back in. Do you have a handful of streaming services, a few of which you rarely use? What about monthly membership fees to a gym – is there a less expensive option? Regardless of where you trim, the difference you save can be set aside for a rainy day or used to cover expenses should your income fall during a recession. Use a tool like Money Management to autogenerate a budget that’ll guide your efforts.
2. Get rewarded for everyday purchases
While a recession may cause you to tighten your purse strings, you won’t stop making purchases altogether. And with credit card rewards, you can turn those everyday purchases into cash back, gift cards, statement credits, and more! Just be sure to make full payments each cycle to avoid accruing interest charges.
- General Electric Credit Union’s (GECU) Gold card gives you 2% cash back at supermarkets and wholesale clubs, 1.5% back at the pump, and 1% back on all other purchases.1 The best part? Cash back is unlimited, so we’ll never cap what you can earn!
3. Grow your balance
There are saving and checking account options that allow you to make guaranteed earnings through interest. For savings accounts, these include:
- High-yield savings accounts. The best high-yield savings accounts have multiple rate tiers that reward you for growing your balance.
- Certificates. You can often score even higher rates on certificates because you’re required to keep the funds in them for a set period before withdrawing them. This can be as short as a few months or as long as several years depending on the financial institution’s offerings.
Spend accounts are another interest-earning opportunity. A high-yield checking account is used for every day spending, like grocery shopping or filling up at the tank, as opposed to financing a nest egg or long-term goals. As a result, your money remains accessible but also growing.
4. Pay off debt
It’s wise to plan for the “what ifs” – including the possibility of a drop in income during a recession. In the unfortunate event you experience this, having less debt obligations will help bridge the gap. Put in the work now to reduce your overall debt, such as a high credit card balance, to give yourself more wiggle room.
5. Meet with a financial advisor
Anchoring Bias is a concept in which investors focus too heavily on one piece of information when making a decision. For example, a dip in the market may cause some investors to look past the long-term performance of their stocks and pull their funds. These premature decisions may affect the return they receive over time. A financial advisor can help you see the big picture and make sound investment decisions.
- Learn more about navigating marketplace volatility in our comprehensive guide.
Regardless of what the future brings, GECU is here to support all of our members with the tools, resources, and interest-earning accounts needed to reinforce their savings, protect their wallets, and minimize recession anxiety. Enroll in Online Banking or download our mobile app to utilize Money Management for budgeting,2 open an account online in minutes, or schedule an appointment for an in-branch appointment to go over your options with a dedicated GECU team member. At Cincinnati’s Best Credit Union, we’re here for you.