As we navigate a global pandemic, the unfortunate reality is that we have just entered a recession in the United States. With businesses having to shut down during the height of COVID-19 to protect the health of community members, unemployment rates have skyrocketed across the US. This is an uncertain time for all, and if you wouldn’t be alone if you’re wondering how to survive a recession. Thankfully, we see the most generous parts of society every single day, and we know there are folks who want to help you. Below are a few tips you can implement to make sure you’re able to stay financially stable for the duration of this recession.
Four steps to surviving the recession
If you’re unsure where to begin in preparing for a recession, don’t worry—we’re here to support you. While the uncertainty of the economy can be stressful and frightening, with a bit of preparation you can financially prepare for the economic downturn our nation is facing and focus on bouncing back quickly.
1. Cut your spending where you can and make a budget
The first step is simple in a financial recession: Cut spending where you can in your life. To do this, take a look at your credit and debit card statements to review which costs are crucial to survival to determine your baseline costs each month. These costs will likely be made up of rent or mortgage payments, and household bills like water, gas, and electricity. Don’t forget to include internet, car payments, groceries, and insurance payments.
Once you have identified and totaled up these costs, you have your cost baseline. This is the amount you need to have to continue living comfortably. From there, you can cut out extraneous spending so that you can start saving that money for the future, instead. You don’t have to cut all extraneous spending—there may still be room for a coffee here and there—but knowing your cost baseline and making a conscious effort to lessen spending and start saving will put you on the right path.
2. See what assistance programs you are eligible for
With the coronavirus pandemic shaping the landscape of our current recession, new relief programs have popped up to provide financial support to different folks, depending on their circumstances. If you’re still wondering how to survive a recession, take a look at the list of blog posts that explore the different types of relief options available, based on your needs:
- Where to Find Financial Help During the Coronavirus
- Coronavirus Relief for Low Income Families: Ways to Find Support
- Resources and Grants Providing Financial Help for Single Parents
- Coronavirus Relief for Homeowners and Renters: A Resource Guide
- Four Ways to Find Coronavirus Relief for College Students
- How You Can Find Food Assistance During the Coronavirus
- Coronavirus Relief for Unemployed Workers: How to Find Help
3. If you’re able, start saving for your emergency fund
Saving up money may not be a realistic goal right now, and that’s okay. That said, if you’re currently able to cover your rent and food, then putting away extra money for unforeseen emergencies that could arise in the midst of the recession is a safe next step. Creating an emergency fund takes dedication and hard work, but having one can be a lifesaver during a recession. Financial experts recommend having three to six months of money saved up in an emergency fund.
By now, you have likely cut your spending and categorized your expenses into a digestible budget. With that, you should now have a good idea of your necessary expenses. These are the expenses you can’t skip, even during a recession. When you know exactly what your baseline costs are each month, multiply that number by six to determine what your goal is to save up for a six-month emergency fund cushion. As Nerdwallet points out, if saving up six months of expenses isn’t anywhere near possible, even having an extra $500 can be a huge help during an emergency.
CROWDFUND TO SAVE UP
Asking for help with money is difficult and can feel embarrassing or even shameful. But you might be surprised to find out that fundraising for a financial emergency during a recession is actually quite common. By starting a fundraiser and asking friends and family to help you get by, you may be surprised how many folks want to donate. People who are still fortunate enough to have a job may want to help others, and giving them the opportunity to donate to a fundraiser to help you stay afloat is a great place to start.
4. Remain hopeful and lean on those around you for emotional support
Recessions typically last about 11 months before the economy starts to recover, according to Acorns. With that in mind, make sure to stay connected with your loved ones, protect your mental health, and focus on reading feel-good stories every once in a while. We need each other to make it through these tough times.
How to prepare for a recession if you are retired
If you are retired and living on a fixed income, a recession might feel overwhelming, to say the least. But, there are resources out there that help you stay as comfortable as possible during a recession.
See what resources are available to you
Luckily, there are assistance programs set up specifically to provide financial help for seniors. If you’re looking for financial support related to the coronavirus pandemic, read through our article, Coronavirus Relief for Seniors: Find Help During the Crisis for up to date information.
Talk to a financial advisor
If you are fortunate enough to have a retirement account or life insurance policy that you can borrow from, it will likely be helpful to talk to a financial advisor for guidance on pulling funds out of those accounts. As the stock market fluctuates, it will be important to speak with a trained professional who understands and can guide you on the tax implications of pulling from retirement accounts or borrowing against a life insurance plan.
