Are Your Finances Healthy Enough for a Recession?
As the economy continues to struggle, financial experts warn that a recession may be on the horizon. With job cuts, automation, and other economic factors potentially on the horizon, now is the time to assess your finances and prepare for whatever comes next. If you’re not prepared, a recession or job loss could devastate your finances and credit score.
“If a recession is in the forecast, we want to ensure our finances are in good shape,” Jessica Perrone, Founder of Her FInancial IQ, says, “It’s important to get your Financial Ducks in order so that you don’t get blindsided by the loss of a job.” The term “Financial Ducks” was coined by Jessica in her course, “Before Investing.” These “ducks” refer to the financial preparedness stages that an individual wants to pay particular attention to in planning for a recession or before investing.
"It's important get your "Financial Ducks" in order..."
The “Financial Ducks” Check List
Here is a quick checklist to help you get ready for whatever may come next:
👉Pay-Off “Bad” Debt
If you are struggling with high-interest debt, it’s essential to try to make an extra payment every month toward your debts. This will help you get out of debt faster and prevent late fees or penalty interest rates from accruing on your current balances. Paying off your debt can significantly reduce the amount you pay in interest—and that’s a worthwhile goal. But it also means that money once spent on various balance repayment can now be saved and put toward other purposes, like an emergency fund.
👉Track Spending and Make a Budget
Tracking and budgeting can help you understand where your money comes from, what happens along the way, and how much is spent. That knowledge allows you to cut off unnecessary spending—and focus on achieving important financial goals. For more insights, try downloading a spending-tracking app like “Mint” or utilizing Her Financial IQ’s “Budgeting Worksheets.”
👉Identify Savings
In addition to tracking your expenses, cutting back on spending and increasing savings is essential. This may mean making sacrifices and looking at the big picture—how much are you willing to sacrifice so that you will be financially stable in the future (1-2 years)? Try to identify unnecessary spending and eliminate it. Is there any way you can cut back on your "wants" category? As long as you approach this gradually, I’m confident it is possible! You may also want to check out @herfiniq on social media for tips on saving money and more!
👉Establish & Grow An Emergency Fund
Setting aside money to cover unexpected financial costs without using credit cards and loans is essential. In addition to job loss, other unforeseen expenses could include medical fees, car fixes, and home repairs. Most financial experts recommend having an emergency fund with enough money to cover three to six months’ expenses.
👉Cultivate Your Credit Score
A good credit score can significantly influence how much you can borrow, how low your interest rates are, and how potential employers may view you. You can improve your scores by making timely payments, keeping card balances low, checking out for credit report errors, and frequently checking your credit scores and reports.
Want to hear more tips for Recession Proofing your 2023?
Join Jessica Perrone, founder of Her Financial IQ, and Karen Yankovich—founder of She’s LinkedUp—as they discuss how to recession-proof your life in 2023 in one episode of the "Her Money & Investing Show". They cover building a robust career plan and leveraging personal finances to minimize risk so you can increase opportunity for success!
Watch the episode👉https://youtube.com/live/BOboDTMiKI4?feature=share
And hey, if you want to supercharge your financial knowledge and strengthen your money management skills, don't forget to check out our fantastic HerFinIQ courses. They're designed to help you take control of your finances, make smarter money decisions and start investing. Happy learning!
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Dear Friend: This content is for educational purposes only and is not investment, tax, or financial advice. Always do your own research. You are solely responsible for all investment, tax, and financial decisions that you make. Please read the full disclaimer here.