Money-saving tips to help you prepare for a recession

Author and business coach Rachel Rodgers shares some survival tips you can follow to navigate a recession.
4:04 | 01/24/23

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Transcript for Money-saving tips to help you prepare for a recession
[MELLOW MUSIC] - A recession is when there is an economic decline. It means that people are spending less money, which means that there's less money circulating in the economy. And so everything starts to contract a little bit. Sometimes people lose their jobs. Unemployment can go up. So I want to give you a few tips to think about as you navigate in a recession. My first tip is around managing your mind because what can happen when you hear that there's a recession coming is panic, right? We start panicking, even if it's not affecting you, right? Even if you haven't lost your job or there's no direct way that it is affecting you right now in this very moment, sometimes we start panicking. No good financial decisions are going to come from panic. So the first thing that you want to do is calm yourself, right? Calm your mind and know that recessions can be challenging economic times. But they can also present opportunities. My next step for getting through an economic recession is to have an emergency fund. An emergency fund can be cash in your bank account. That's ideal, right? If you've got some money in your savings account, that's wonderful. An emergency fund can be built up with your efforts, with your skills. So maybe you want to have a little side hustle. Maybe now is a great time to start a business online. There are so many different ways that you can freelance and bring in extra cash that you don't just have to rely on your 9 to 5 to bring in all of your money. So use that strategy, too, to build up your emergency fund. My next tip for getting through a recession is delay big purchases. Maybe you were thinking about getting a new car. Maybe you were going to go on a fancy vacation. Maybe you were even going to get married or have a big event this year. If you can delay some of those big purchases that are not assets, that's something that I would definitely consider doing so that you can keep that money, right, hold on to your cash, save more of your cash. And here's why. When there is a recession, there is opportunity. One way to think about it is the stock market is on sale. You can buy assets and shares of a company for less than you would have last year or the year before that. And so you want to have some cash available to be able to take advantage of those opportunities, should they arise for you. My next tip for getting through a recession is keep track of your credit score. Make sure that you're keeping tabs on what's happening with your credit. And if you can keep that score up high, that's what you want to do as much as possible. Why? Because you want to have access to credit, access to capital, should you need it in an emergency, or should you need it to take advantage of an opportunity that might arise. One of the best ways to keep track of your credit score is to sign up for one of these different websites that provide a free credit score. Sometimes you have credit cards that will also provide your free credit report. And so you want to set calendar reminders. Remind yourself at least once a quarter, maybe even once a month to go in and look at your credit, see what's happening with your credit report, and just make sure you're keeping tabs on that credit score. Another tip is to reevaluate your budget. When times are really good and there's lots of money flowing through the economy, we can get very comfortable and sort of lazy around managing our money and not really paying attention to what's going through our bank account. So now is a great time to reevaluate your budget. Go through your bank statements. Go through your credit card statements. See if there's any softwares or subscriptions or other charges that are coming through your account for stuff that you don't even use anymore. Now is a great time to eliminate anything that is not adding benefit to your life. Save that money, and use that money to stack up your emergency fund or otherwise to take care of opportunities. Right now is a great time to look at everything and make sure you're only spending money on things that actually matter to you and that actually improve your life. So remember, when there is a recession, sometimes it sounds all doom and gloom. And it feels really scary. I graduated from law school in the middle of a recession. Jobs were scarce. However, it presented with me an opportunity. I wound up starting my own business and going down a new career path that I wouldn't have if the recession hadn't happened. So remember, we want to stay calm and look for the opportunities.

This transcript has been automatically generated and may not be 100% accurate.

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