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Survive a Failing Economy—it’s a phrase that’s become increasingly relevant. In uncertain economic times, we all need to reassess and adjust our finances. Whether it’s cutting back on daily spending, rethinking savings strategies, or reviewing investments, a weak economy demands a closer look at our individual financial health. Making informed, proactive changes can be the key to staying afloat when things get tough.
Experience and advice from experts offer valuable lessons regarding weathering those storms.
1. Redo Your Budget
It’s time to load up a blank spreadsheet and detail your income and all expenditures. How much is coming in, and what outgoings are there every month? With that information in front of you, it’s easier to identify essential spending and areas of the household budget where cuts can be made.
2. Plan Ahead
Are there any significant life events on the horizon that will impact your budget? A family wedding, a luxury vacation, or even retirement? If a substantial life change is on the way, it can make planning harder, but it’s essential to consider those details when preparing the next steps.
3. Stay Home More
The next few months won’t be fun if your finances are under extreme pressure. This doesn’t mean you have to spend all day under lock and key, but it makes sense to cut down on nights out and expensive restaurant meals. Keep social spending in check as the first stage in your battle.
4. Implement a Spending Fast
It’s quick to build habits, and a spending fast can make you more careful about your finances. If you’re struggling to stay home and away from temptation, take one or two days each week where you spend no money. The practice will soon feel natural and help you remain in control.
5. Use Short-Term Savings Before Loans
Financial experts recommend using savings if you must find extra money to help you through the crisis. Loans will add to your expenses and come with higher interest rates than your short-term savings will earn. Digging into a savings account is a wrench, but it’s the most sensible option.
6. Stick with Long Term Investments
If you don’t have to use long-term investments, experts recommend leaving them to weather the storm. Stocks and shares will inevitably fluctuate, and while your portfolio may take a hit during the tough times, a diverse set of investments can recover when the economy gets into better shape.
7. Get a Side Hustle
An economic downturn can be an excellent time to earn extra income. You can take on many side hustles, from buying and selling items to renting out your driveway. Research and find a side job that suits you and fits your schedule.
8. Time to Change Jobs?
If a side hustle doesn’t fit your daily schedule, is it time to ditch your current job? A recession isn’t the best time to enter the employment market, but if your role is in high demand, it can survive economic downturns. A salary increase is a potential solution if your budget is tight.
9. Check All Your Entitlements
If you’re on a low income, are you claiming all the benefits you may be entitled to? There is help in economic emergencies for those whose salaries are below certain thresholds. Seek independent advice or do some calculations online.
10. Rethink Your Emergency Fund
Many recommendations suggest building up your emergency fund. It’s solid advice but may not be possible in tough times. Instead, maybe this is the emergency you’ve been planning for. If you have a rainy day fund, consider whether you need it to help you through the storm.
11. Maintain Your Credit Score
In tough economic times, banks and lenders tighten their purse strings, too. They focus on those with excellent credit, so keep your score high. Paying bills on time and keeping your oldest credit card open are the tasks to remember when maintaining your healthy credit score.
12. Consider Debt Shifts
High-interest rate credit card debt can be a real issue when the everyday cost of living rises. If you have no spare funds to clear it, consider refinancing with a balance transfer. Some credit card companies offer a 0% rate for a promotional period, and users can save a lot of money during that time.
13. Maximize All Returns
When times are tough, every cent counts. Some banks offer cashback with packaged accounts or via debit and credit cards. Cashback sites will also pay a small commission to consumers who buy online via their links. If you use a cashback credit card, pay it off monthly, or the interest will outweigh the returns.
14. Try Budget Stores
If you’ve never shopped at a budget store, try it. Here in the UK, a switch to Aldi for groceries reduced my weekly bills and helped put me back in charge of my spending. It’s not always easy to pick up well-known brands at these outlets, but the quality of the produce is far better than you may think.
15. Cut down on Cable
Advisors tell us to reduce unnecessary household spending, but cable is often overlooked. Do you need all the cable channels in your package? Cutting a few themed channels can help. I saved a few bucks by dropping kids’ TV channels when they had grown out of them.
16. Be Energy Efficient
When the cost of living crisis increased throughout the UK in 2023, I was shocked to see how much energy I used. Installing a smart meter provided a wake-up call and inspired me to spend more efficiently. Turning off lights and the TV when not required significantly reduced my electricity and gas bills.
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