(WXYZ) — When it comes to the economy, nobody has a crystal ball, but rumblings of a possible recession have a lot of people worried.
From the rising cost of gas to increases in grocery prices, we're looking into what you can do to "recession-proof" your finances, so to speak.
Jennifer Bloom, the Director of Client Engagement for Bloom Advisors in Farmington Hills, shared her dos and don'ts of protecting your money with a possible recession looming.
DOs
First of all, plan more, and panic less.
“Review your financial plan. If you don't have one, make one. And map out what are those worst-case scenarios. What if you lose your job later in the year or in early 2023? What would your plan be? What would you do?" she said.
Next, review your expenses and cut where you can. Lose the gym membership if you don't go, or cut streaming systems out you don't use as much.
Bloom recommends money-saving apps like Trimand Truebillto help you out.
Also, find ways to boost your cash flow with a side hustle.
“Whether it's selling your crafts on Etsy or, you know, taking up a side job, you know, doing housework for a neighbor, whatever it may be, whatever your skill set is. Even if you don't have one identified, this is a good time to think about that," Bloom explained.
A biggie is to address your high interest and variable interest rate debts. Yes, we're talking about paying off your credit card debt.
"You will get hammered if the Fed raises rates again. And the debt is already, you know, crippling," Bloom said.
Consider helpful tools like the consolidation platform Sofi, or seek out debt counseling from nonprofit Greenpath Financial Wellness.
Also, build your emergency savings. –Bloom said that, ideally, you should save up 6-to-9 months of living expenses.
"I just saw an article about somebody who was selling things that they no longer wanted on Facebook Marketplace and on eBay. And they were using that money to build a savings account," she said.
So, even if you start saving slowly, that's better than nothing. Every bit counts!
DON'TS
Bloom said the three things you should not do are:
- Don't panic sell your 401k
- Don't pause your retirement contributions
- Don't assume new debts
Instead of just worrying, be proactive and take charge of your finances.
Remember, many recessions typically don't last that long, according to Bloom. And that's an important perspective to have.
