How do you prepare for a recession in the US financing

New York- Gasoline, food and rent prices are rising. The US Federal Reserve raised interest rates to the highest level since 2018.

The US economy has shrunk for two straight quarters and experts are divided on expectations of a possible recession. What is clear is that economic uncertainty will not end soon. However, there are some steps you can take beforehand if we find ourselves in a more difficult financial situation.

The question about a recession is not whether or not it will happen, but when it will happen, says Yiming Ma, a professor at Columbia University. He said people should be prepared, but not panic.

“Historically, the economy has always gone up and down,” Ma said. “It’s something that just happens, it’s like getting the flu.”

He added that some people’s immune systems allow them to recover faster than others.

If you think an economic recession could destabilize your finances, here are some preventative steps you can take.

Measure your expenses and create a budget

Knowing how much you spend each week is key. Ma recommends sitting down and writing down how much you spend each day. This will help you know your income and payments, and you will be able to identify unnecessary expenses.

The Federal Financial Education Program “Money Smart” also recommends this first step.

By understanding how much money you have and how much money you spend, you may be able to make changes that will help you through tough times.

Once you set the budget, you will be able to determine where you are spending the most. An additional advantage is that you will be able to identify and delete unnecessary expenses in order to create a savings plan.

If it’s hard for you to budget, there are guides like How to Create a Budget from Bank of America or the Easy Guide to Budget Development from the Accion Opportunity Fund that can help.

Save when you can

Although having an emergency fund to pay for basic needs is ideal, the truth is that many people can’t afford to save every two weeks. The more unnecessary expenses you can cut, the more you can save. Ideally, create a budget that covers your basic needs for 3 to 6 months, said Jane Natalie, co-founder of Troutwood, an app that helps people create financial plans.

Programs like “America Saves,” a nonprofit campaign for the Consumers Federation of America, help you create a plan to organize your finances.

He said if you have a savings account at the bank, it is important to check if your bank gives you a good interest rate.

“It’s helpful to know what other banks offer so you know where to keep your savings, rather than leaving it in the bank they’ve been in for the past 20 years,” he said.

Ma’s recommendation is to consider monthly and service charges that can lower the amount of your savings. But don’t limit your options, because online banks sometimes offer better rates than traditional banks.

Consolidate your loans, take no more

As the interest rate rises, experts recommend consolidating your loans so that you have debt at a fixed interest rate. If possible, pay as much as possible to save money in the future.

“Job stability tends to be worse when there is a recession (and) not the time to accumulate debt,” Ma said.

Since debt can be difficult to pay off, there are guides to help you make a plan. It is with the guide on how to get out of debt from the Federal Trade Commission.

When inflation is rising, it’s not a good time to get new loans to pay for big expenses like buying a new car. However, experts recommend that it is best to buy appliances such as vacuum cleaners, stoves, mowers, or any other permanent device as soon as possible to avoid increasing their prices in the future.

Visit second hand stores

Allen Gillon, who works as a caregiver in California, has been affected for months by soaring prices for household products like groceries, kitchen towels and gasoline.

His son’s favorite juice Hi-C Orange was $1.99 for six packs and is now $2.50. Since the beginning of the COVID-19 pandemic, when Galeon stopped working with multiple families and stayed with only one family to reduce the risk of illness, his family has faced financial instability.

One of Gelon’s actions has been to buy clothes and electronics from thrift stores, whether it’s through Goodwill, pawnshops, or Craigslist. Craigslist lets you search for sellers in your area, so you can avoid driving, which saves you fuel.

Negotiate your monthly receipts

Since the start of the pandemic, many companies have updated their support policies and become more flexible with their customers, said Kia McAllister Young, America Saves director.

Call your monthly service providers to negotiate your bills, whether it’s utilities, the phone or the internet company, they can help you pay less, McAllister Young said. He added that people can ask for the best rates and available discounts or vouchers that can help them reduce the monthly amount.

“If you tell them ‘I’m thinking of switching companies,’ it helps let them know that you’re considering not continuing with their services and they can give you the best price. The goal right now is to save as much as possible,” McAllister Young said.

Federal programs like the Low-Income Home Energy Assistance Program help you lower your utility bills, or Lifeline helps you pay your phone bill. If you are not sure if you qualify for a federal or state program, you can call 211, where you will be connected to local professionals who can help you find the right program.

Keep in your locker

Visiting the supermarket with a menu, buying generic brand products or buying in the majority are some of the recommendations of the US Consumer Federation.

“A lot of stores are going to compare prices, if you show them that their competitors have the same product at a lower price, they will match the price,” McAllister Young said. “You should also look at the stores near the house, so you can save on gas.”

Another alternative to save money on your store is to visit apps like Olio, which connect you with people in your community to share a store they won’t use anymore. Or you can use Too Good To Go, where customers can buy additional commercial foods at a discount. Both applications are only available in English.

Learn about government government assistance programs

Even when you’re trying to save, there are times when your salary doesn’t cover your basic needs. If you find yourself in this situation, there are programs around the country that can help.

“Sometimes there isn’t enough money at the end of the month,” said Michael Best, an attorney at the National Consumer Law Center who works on financial services cases.

To use this assistance, check to see if you qualify for programs such as the Rental Assistance Program, Food Stamp Program, Farmers Market Nutrition Program, or Homeowners Assistance Fund. All of these federal programs are coordinated by their states. Some countries provide additional assistance.

Take care of your mental health

Between worrying about paying your bills or not knowing what’s going to happen with your financial future, your stress levels can soar.

“It’s a messy existence,” Galleon said. “You have to organize yourself well and remain calm to take care of your mental health.”

Debra Kesen, clinical director of the Light On Anxiety CBT Treatment Center, recommends that you first learn to recognize when your body is under stress. In addition, she recommends doing relaxation exercises such as breathing or touching a wall to calm stress, or doing “five senses to relieve anxiety” exercises.

Most health insurance covers some form of mental health support. If you do not have health insurance, you can look for therapists who offer reasonable rates. You can search for therapists at FindTreament.gov and the Anxiety and Depression Associated in America guide.

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