Follow these money tips to better manage your finances during the recession

last few years have been extremely turbulent, to say the least. Inflation is at an all-time high, and it seems like people are losing their jobs left and right. These times of economic uncertainty can be scary. With a bit of creativity and smart economic thinking, you can work toward a bit more financial stability for your family.

1. Prioritize your emergency fund

Your first financial priority in a recession should be to build up your emergency fund if you don’t have one or if it’s not where you want it to be yet.

In general, it’s recommended that you have between 3-6 months of living expenses saved up in your emergency fund. This way, if you or your spouse were to miss a paycheck, you would have enough set aside to stay afloat.

The best way to make sure you are actively making contributions to your emergency fund is to either set up automatic transfers from your account or manually transfer Money to your emergency fund right after you get your paycheck. This way, you can adjust your less important spending habits rather than waiting until the end of the month to contribute your leftover spending money to your account.

2. Be smart about your debt payments

When it comes to debt, you should always try to focus on paying down accounts with a high interest rate to avoid paying more than you need. But, you should also be smart about how you make your payments too.

If you have accounts that accumulate interest daily, you may consider separating your full monthly payment into biweekly payments instead. On a biweekly pay schedule, you will not only make one extra loan payment per year, but you will also save money on interest for those accounts that accrue interest daily. This will save you lots of money in the long run if you can make this adjustment.

3. Make sure you’re insured

Money is bound to be tight these days. So, your first priority probably is not to save money in preparation for a day when you or your partner may not be around. Unfortunately, though, if an accident were to occur, causing an untimely death, your family may financially struggle if you don’t have a proper plan in place. Life insurance is one way that you can make sure that your family would be financially protected.

For families on a tight budget, term life insurance is generally a good option as families can get a good amount of coverage for a small monthly premium. If the policyholder were to pass away during the term of their life insurance policy, their beneficiaries would receive a payout that could not only help them pay for funeral arrangements and other large expenses but also help them stay afloat as they adjust.

Normally, the process of getting life insurance is somewhat time-consuming. From filling out a large application to undergoing a medical exam, this can all be a bit much for people with busy schedules. Nowadays, though, some companies offer a type of no medical exam life insurance that speeds up the process significantly.

Instead of going through an in-person medical exam and going through a manual underwriting process, an accelerated life insurance policy requires applicants to answer questions about their medical history, lifestyle, and other related questions and uses algorithms to determine the amount of coverage and premium cost someone can get. This allows applicants to skip over the medical exam and drawn-out underwriting process, making the process much simpler.

4. Rethink your investments

While it may feel like you should halt your investments, cash out, or sell, it’s not the best time to make any rash decisions with your investments. With that being said, rethinking your contributions to your retirement might be a good idea.

If you have a retirement plan with your employer, consider dropping contributions to meet your employer match if you currently contribute a higher amount. When money is less tight down the road, you can always increase your contribution, but this will open up a little bit more liquid money for you and your family during a time of economic uncertainty.

5. Plan grocery store trips around sales

Now more than ever, it’s smart to start eating more at home than you go out to eat. Grocery store prices are crazy high right now, so even when you plan meals at home, your grocery bill still may be a big expense. You want to make every penny count here, so it’s time to start planning your weekly meal plans around grocery store sales.

Start by taking inventory of what you have in your pantry and your fridge. You don’t want to buy too much, especially products that are quick to expire. Figure out what day your grocery store of choice releases its weekly ad and be sure to start planning right away so you don’t miss out on any deals. You may even try to look into some coupons to maximize your savings even further.

If you see some good deals on pantry items, be sure to stock up while these are on sale. Don’t forget about price-matching either! Many stores will match a price you’ve found online or at another store.

6. Take the hand-me-downs

Kids grow like weeds. Buying brand-new clothes all the time obviously adds up, especially when money is tight. While you may have previously passed on hand-me-downs, now it’s time to pick through them. This is a great way to make sure your kids have what they need without fronting the amount of money you normally spend.

Of course, there will always be times when you need more than what you can get from hand-me-downs. In this case, there are still a few ways you can save money on clothes for the kiddos:

• Use a price-matching browser extension – If you’re shopping online, you can download an extension to your browser to help you find the best price possible.
• Shop in the off-season – If you can wait a while, it’s best to shop in the off-season when things are on sale. It can be tricky for growing kids, but it may be helpful to get what you or your spouse need during these times.

7. Ask people in your community to carpool

As you make your way through a recession, you should keep in mind that you are probably not the only family you know whose money is tight. A big way to save money is to carpool with people in your community. Find a group of people in your community who live close and share a similar schedule as you and your family. You may want to come up with a carpool crew for school drop-off or pick-up, after-school activities, or whatever other activities require your family to drive. Not only will you save a few bucks on gas, but you’ll also free up some of your time too.

8. Utilize your local library and other resources

Your library offers so much more than just books. Of course, you can still use your library to check out books the old-fashioned way, but your library may also offer things like movies, music, and even sometimes video games!

Beyond what you can borrow, many libraries offer loads of community resources as well. From help with homework to after-school programs to fitness classes, your library may offer more things to do than you even realize. Check out what your local library offers, and take full advantage of those free resources.

9. Be transparent with your kids

While you definitely don’t want to burden your children with family money issues, they are also smart enough to sense when something isn’t right. Being transparent with your children and helping them understand the situation is a far better option than hiding your struggles from them. You just need to approach the conversation delicately.

When you talk to your kids about money, explain the issue to them in a way they will understand. While you may be able to explain inflation to a teenager, a child under 5 will probably not understand that type of complexity. Meet your kids at their level of understanding.

As you talk to your kids about money, let them ask as many questions as they need to guide the conversation. Keep a positive attitude and even involve them in potential solutions. You can use this situation as a teaching opportunity to help their financial literacy skills.

It’s a financially crazy time for lots of people right now, so remember that you are not alone in this! Get creative with your finances and educate yourself about the current economic situation. Don’t live in fear or let your financial issues destroy your relationships. Remember to have fun and live your life while being smart about your financial situation.

p.s. Related posts:

Money Lessons: 5 Key Ways to Teach Your Kids About Money

Teaching Kids About Money: Summer Curriculum

4 Tips to Saving Money on Your Kids School Attire

5 Simple Tips to Manage Your Money as a Parent

How to Save Enough Money for Your Child’s College Education

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