Economists define two consecutive quarters of economic decline as a recession. With a bit of financial discipline and laser-like focus, your chances of successfully weathering a recession can improve. Whether the effect of the economy has your wallet feeling stretched thin or you’re looking for ways to tighten your spending habits, we’ve got a few suggestions on building up reserves during a recession.
When the economy is in a decline and we’re faced with soaring prices for everyday necessities, it can feel nearly impossible to make ends meet, let alone put anything extra away in savings. Thankfully, we have a few recession proof ways you can still save when the economy is down.
Using a budget is money management 101 and something every household can benefit from – especially during times of economic uncertainty. Budgeting can be accomplished in just a few simple steps by adding up your expenses and income, then reconciling the two. There are many ways to implement a budget, but exploring different options will help determine which one best fits your needs.
Paying yourself first can help boost your cash reserves. This advice applies in the best of times, but it’s especially true when it comes to saving money in a recession. Setting aside a predetermined portion of your paycheck to be deposited into an emergency fund, your retirement, or other designated account will keep you from making impulsive purchases that you may regret later.
Peach State offers resources that can help you save money routinely and build up your cash reserves more easily.
Uncovering ways to cut back on expenses during a recession requires a bit of creativity but it isn’t impossible to achieve. Here are a few things you can try to help stretch your dollars.
When it comes to eating out, less is more. According to the Bureau of Labor Statistics, the average American household spends roughly $3,600 a year (or $300 a month) dining out. Eating at home can be substantially cheaper than ordering takeout or dining at a restaurant and in many cases, you could make a restaurant meal for a third of the price at home. This small change can potentially save you hundreds, if not thousands of dollars during a recession. For some cost-saving recipes that you can make at home, check out our “7 Summer Recipes You Can Savor Without Burning Your Budget” blog. Many of these recipes can be enjoyed any time of year!
As interest rates climb, so does the cost of debt. And if you’re spending a large portion of your income on credit card and loan payments, that leaves little savings leftover for a rainy day. Eliminating debt is an important part of building up your savings, and consolidating debt to a fixed rate loan may save you money on interest. It can also make for predictable monthly payments, which will help with budgeting and saving during a recession.
The silver lining to rising interest rates is that many savings products are also paying more. But deciding which type of savings can survive a recession can be a tough decision to make. Thankfully, there are safe options for growing your money during a challenging economic time.
During a recession, deciding which type of savings product is the most secure and will earn you top dollar can make anyone feel overwhelmed. In general, Term Share Certificates (or CDs) and Money Market Accounts earn a higher yield and remain secure in any economic environment. Moving money from an account that isn’t earning interest into a higher yielding option is a savvy move for growing your savings.
Credit union deposits are subject to regulatory insured limits to protect its members no matter what state the economy is in. Peach State FCU Savings Accounts are federally insured by the National Credit Union Share Insurance Fund for up to $250,000. Accounts are also insured for up to an additional $750,000 with coverage by Excess Share Insurance Corporation (ESI), a licensed insurance company, for a combined coverage of up to $1,000,000.
When the economy is going through a rough patch and it feels nearly impossible to save, we’re here to help! At Peach State, we offer higher dividend savings options like our Term Share Certificates (or CDs) and Money Market Accounts to help grow your dollars faster. Our educational resources can help to boost your savings know-how, calculate a savings goal, and connect members with a debt and budgeting counselor through our financial partner, BALANCE. You can depend on Peach State to lend a helping hand no matter what state the economy is in. Contact us to get started today!
1 A separate club account will automatically be opened when signing up for and using the Visa Debit Card Round Up program.