How to recession-proof your life amid economic uncertainty

NEW YORK (AP) – Gas, food and rent prices are skyrocketing. The Federal Reserve has hiked interest rates to the highest level since 2018. The US economy has contracted for two consecutive quarters.

Economists are divided on whether a recession is imminent. What is clear is that the economic uncertainty will not go away anytime soon. But there are steps you can take now to be prepared for whatever lies ahead.

Yiming Ma, an assistant professor at Columbia University, says it’s not a question of if, but when a recession will hit. People should prepare but not panic, she said.

“In the past, the economy was always up and down,” Ma said. “It’s something that just happens, it’s a bit like a cold.”

But she notes that some people’s immune systems are better able to recover than others. It’s the same with finances. If you think a recession could destabilize yours, here are some things you can do to prepare.

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KNOW YOUR EXPENSES AND MAKE A BUDGET

Knowing how much you spend each month is key. Ma recommends sitting down and writing down how much you spend each day. This allows you to see what’s coming in, what’s going out, and what unnecessary expenses you might be able to save.

“By understanding what money you’re getting and what you’re spending, you may be able to make changes that will get you through tough times,” advises Money Smart of the Federal Deposit Insurance Corporationa financial education program.

Budgets often show expenses that can be eliminated entirely, or impulsive expenses that can be avoided through planning.

Free courses like How to Make a Budget (and Stick to It) can help you learn how to create a budget. ” by CT Dollars and Sense, a partnership of Connecticut government agencies, and Nerd Wallet’s budget calculator can be good starting points.

SAVE AS YOU CAN

The more unnecessary expenses you can cut, the more you can save.

It’s not possible for everyone, but Gene Natali, co-founder of Troutwood, an app that helps people create financial plans, says having a budget to save enough to cover basic needs for three to six people is ideal months to cover.

Programs like America Savesa nonprofit campaign run by the Consumer Federation of America, can help create a roadmap.

And if you have a savings account, it’s important to check whether your bank is giving you a good interest rate and shop around if it’s not, Ma said.

Her advice is to keep an eye on the monthly fees or service fees that could eat up your savings. But don’t limit your options. Online banks sometimes offer better rates than traditional ones.

CONSOLIDATE YOUR LOANS AND STOP BURDING

When interest rates rise, experts recommend consolidating loans into a fixed-rate loan and, if possible, paying off as much debt as possible.

“Job security tends to be worse when a recession comes, it’s not a good time to rack up debt,” Ma said.

Instead, pay off the existing debt is easier said than done. The Federal Trade Commission’s consumer guide to getting out of debt can help you create a plan.

With interest rates high, it’s also not a good time to take out new loans for big expenses like cars, although experts recommend that you buy durable goods like vacuum cleaners, stoves or dishwashers as soon as possible to avoid future price hikes.

VISIT SECOND HAND SHOPS AND YARD SALES

Allen Galeon, a home care worker in California, has been hit for months by the rising prices of household items like groceries, paper towels and gasoline for his commute.

His son’s favorite Hi-C orange juice, which cost $1.99 for a six-pack, is now $2.50.

His household has struggled with financial instability since the pandemic began, when Galeon was reduced from taking care of multiple families to a single client to reduce his health risks.

One decision he has made is buying items such as clothing or electronics secondhand whenever possible, whether from Goodwill, pawnbrokers or Craigslist. And with Craigslist, you can search for areas to reduce driving – which means less gas and inconvenience.

NEGOTIATE YOUR MONTHLY BILLS

According to Kia McCallister-Young, director of America Saves, since the pandemic, many companies have updated their aid policies and become more flexible with users.

Calling monthly service providers to negotiate bills — whether it’s utility, phone service, cable, internet or auto insurance — can result in significant savings, McCallister-Young said. Individuals can ask for the best price, any available rebates, rebates or coupons that can result in a lower monthly fee. If a vendor is competitive with other companies, there’s an even greater chance of a discount, she added.

“If you tell them, ‘I’m considering moving,’ or that you’re looking around, that helps — if they know you’re considering going, they’ll give you the best deal, and the goal right now is to do it.” find as much cash flow as you can,” she said.

Find out about federal programs like the Low Income Home Energy Assistance Program, that helps cover bills, and Lifeline, who can help with phone bills. If you are unsure whether you qualify for a federal or state program, you can call 211which connects you to a local specialist who can help you further.

TURN ON YOUR FOOD

Grocery shopping with a meal plan, buying generic drugs instead of brand names, or buying in bulk are some of the Consumer Federation of America’s recommendations.

“Many shops offer price adjustments. So if you show them that a competitor is selling the same product at a lower price, they match it,” McCallister-Young said. “You should also look at the stores closest to you so you don’t spend the extra money you would save on gas.”

An alternative way to save money while shopping is through food sharing apps like Olio, connecting people in their community to share extra groceries, and Too Good to Go, where customers can buy surplus groceries from companies at a discount.

VIEW THE GOVERNMENT AID PROGRAMS

Despite these saving and spending practices, a monthly wage isn’t always enough to cover important expenses. If this is your situation, programs across the country are available to assist you.

“Sometimes there just isn’t enough ‘end of the month’ at the end of the month,” said Michael Best, an attorney at the National Consumer Law Center who practices financial services issues.

To take advantage of these resources, see if you qualify for the Emergency Rental Assistance ProgramSupplemental Nutrition Assistance ProgramFarmers Market Nutrition Programor the Homeowner Assistance Fund. All of these are federal programs coordinated by state governments. Some states offer additional local programs for their residents.

SEARCH FOR COMMUNITY HELP

If you are experiencing food or housing insecurity, look for nonprofit or community organizations in your area. From the housing subsidy and food banks for supply assistance, nonprofits across the country can help. National organizations such as Feeding America Host boards in all 50 states.

“We’re already seeing the community turn to us in overwhelming numbers because of the country’s economic stability,” said Kavita Mehra of Sakhi for South Asian Womenan organization that helps survivors of domestic violence in New York City.

Her organization provides shelter, food and cash for emergencies to people in the community. She said that between January and June her group distributed over $150,000 in emergency cash assistance to survivors who were having a harder time keeping lights on and putting food on the table. That’s more than all of last year.

Food aid organizations like Ample HarvestHunger Free America and Food Rescue US offer maps that allow users to locate a nearby grocery bank by entering their zip code.

TAKE CARE OF YOUR MENTAL HEALTH

Between worrying about the bills and not knowing what your financial future might hold, your stress levels can be through the roof.

“It’s a hectic existence,” said Galeon. “You have to manage a lot and keep a cool head for the sake of mental health.”

Debra Pillow, a clinical director at CBT treatment center Light On Anxiety, recommends first recognizing when your own body is stressed. She then recommends mindfulness exercises like breathing, touching a wall to calm yourself, and doing the Five Senses for Relieving Anxiety exercise..

Most health insurance plans cover some type of psychiatric support. If you don’t have health insurance, you can search for therapists across the country using a tiered scale including FindTreatment.gov and the Anxiety and Depression Association of America Directory.

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The Associated Press receives support from the Charles Schwab Foundation for educational and explanatory reporting to improve financial literacy. The independent foundation is separate from Charles Schwab and Co. Inc. The AP is solely responsible for its journalism.

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