The economy is in a downturn and it’s taking a toll on many people’s finances. But there are some things you can do to help weather the storm. Here are six tips to help you with managing money during an economic downturn.
Make a budget and stick to it
This is probably the most important thing you can do when managing money during an economic downturn. Know exactly how much money you have coming in and going out each month. Cut out unnecessary expenses and put more money towards debt repayment as a priority, and saving for those challenging times.
Know your debt options
If you find yourself struggling financially, it might be time to consider consolidating your debt or negotiating new terms with your creditors. If you are in the UK, places such as Citizens Advice is an excellent resource you can tap into. Let Google be your friend as there are so many different resources and tools out there. Also YouTube is pretty awesome too, but always, always do your due diligence and your own research. This is essential.
Build up your emergency fund
An emergency fund is essential for managing money and weathering any financial hardships that come your way, whether it’s a redundancy, unexpected bills, or something else, aim to have at least 3 – 6 months of living expenses saved so you know you can cover yourself if the worst comes to worst. I have different accounts and the one I use as my emergency fund has a standing order setup each month so money is transferred when I get paid, and the account is also hidden.
Save money on everyday expenses
One of the easiest ways to start managing money is to save and cut back on your everyday expenses. Take a close look at your budget and identify at least three things you can cut back on. For example, if you’re spending £12 a week on coffee, see if you can reduce that to £6 or zero by making coffee at home or taking advantage of office coffee instead. Little changes like this can make a big difference in your overall budget. Don’t view what you save as free rein to spend elsewhere, transfer it to your emergency fund or use it to pay off any debt.
Prioritise your spending
Another important tip for managing money during an economic downturn is to prioritise your spending. Make a list of your must-haves and nice-to-haves. For example, if you have a gym membership that you never use, now might be the time to cancel it and invest in some at-home workout equipment instead, and/or invest in a lower membership option that is flexible and supports your home workouts. I absolutely LOVE Body by Ciara. Back to the point. By prioritising your spending, you’ll ensure that your hard-earned money is going towards the things that matter most to you.
Make extra money
Consider exploring the different ways you can make some extra money. Jot down your skills, knowledge, experience and the things people have told you, you are great at (the She’s So Audacious Making Bold Moves Notebook is amazing for this). Whilst times may be tough, there are people who are spending money still and paying people for the services that they offer. Fiverr, PeoplePerHour, UpWork and many more sites out there are great for pitching and marketing yourself.
Also think about selling unused or used items around your house on platforms like Vinted. Be creative and hone in on what you have the ability to deliver on, and monetise it!
The economy may be down, but that doesn’t mean you have to be. With these six tips you can start managing money during an economic downturn and come out ahead when things rebound. Budgeting, investing in yourself, building up an emergency fund, finding different ways to make money and knowing your debt options are key to weathering any financial storm. So don’t wait—start taking steps today to secure your financial future.