How to protect your life from stagnation amid economic uncertainty

A sign for the New York Stock Exchange is displayed on the floor at the New York Stock Exchange in New York, Wednesday, July 27. Stocks rose modestly early Friday, on Wall Street, despite the news of closely watching inflation data that jumped by the most in four decades in the past month. (Seth Wing, The Associated Press)

Estimated reading time: 7-8 minutes

SALT LAKE CITY – Prices for gas, food and rent are rising. The Federal Reserve raised interest rates to the highest level since 2018. The US economy contracted for two consecutive quarters.

Economists are divided over whether a recession is looming. What is clear is that economic uncertainty is not going away any time soon. But there are steps you can take now to be prepared for whatever is to come.

Yiming Ma, assistant professor at Columbia University, says the question is not whether a recession will occur but when it will happen. She said people should prepare but not panic.

“Historically, the economy has always been in an ups and downs,” Ma said. “It’s something that just happens, it’s a bit like catching a cold.”

But it does suggest that some people’s immune systems are better able to recover than others. It’s the same with finances. If you think an economic recession could destabilize you, here are a few things you can do to prepare.

Know your expenses and make a budget

Knowing how much you spend each month is key. Ma recommends sitting down and writing how much you spend day in and day out. This will help you know what will happen, what will happen, and unnecessary expenses that you may be able to cut.

“By understanding the money you’re getting and what you’re spending, you may be able to make changes to help you through tough times,” advises Federal Deposit Insurance Corporation’s Money Smart Program for Financial Education.

Budgets often reveal expenses that can be eliminated entirely or impulsive spending that can be avoided by planning.

For guidance on creating a budget, free courses like “Create a Budget (and Stick to It)” by CT Dollars and Sense, a partnership between Connecticut state agencies and Nerd Wallet’s Budget Calculator, can be good places to start.

Save what you can

The more nonessential expenses you can cut, the more you can save.

It’s not possible for everyone, but Jane Natalie, co-founder of Troutwood, an app that helps people make financial plans, says it’s ideal to budget to save enough to cover basic necessities for three to six months.

Programs like America Saves, a nonprofit campaign by the Consumer Federation of America, can help create a roadmap.

Ma said, if you have a savings account, it is important to check if your bank gives you a good interest rate and to shop if not.

Her advice is to keep an eye on monthly fees or service charges that may eat up your savings. But don’t limit your options. Online banks sometimes offer better rates than traditional banks.

Collect your loans and don’t take any more

With interest rates rising, experts recommend consolidating your loans for a single fixed rate loan and, if possible, paying off as much of your debt as possible.

“Job security tends to be worse when the recession comes, and this is not a great time to build up debt,” Ma said.

But paying off your current debts is easier said than done. The Federal Trade Commission’s consumer guidance guide on getting rid of debt can help you develop a plan.

With interest rates rising, it’s also not a great time to get new loans for big expenses like cars, although experts recommend that if you need durable items like vacuum cleaners, stoves or dishwashers, you can buy them as soon as possible to avoid increases prices in the future.

Visit used stores and yard sales

Allen Galleon, a home care provider in California, has been affected for months by the soaring prices of household staples like groceries, paper towels, and gas on his commute.

Hi-C’s son’s favorite orange juice, which was $1.99 for a six-pack, is now $2.50.

Since the beginning of the pandemic, when Galleon stopped caring for multiple families for one client to reduce health risks, his family has dealt with financial instability.

One option he made was to purchase items such as used clothing or electronics whenever possible, whether from Goodwill, pawn shops, or Craigslist. And Craigslist lets you search by area, for less driving — which means less gas and hassle.

Negotiate your monthly bills

Since the pandemic, many companies have updated their relief policies and become more flexible with users, according to Kia McAllister Young, America Saves director.

McCallister Young said that calling monthly providers to negotiate bills — whether it’s utilities, phone or cable service, internet or car insurance — can lead to meaningful savings. Individuals can request the best rate or any available discounts, discounts or vouchers that can result in a reduced monthly fee. She added that if the service provider is competitive with other companies, there is a better chance of getting a discount.

“If you say to them, ‘I’m thinking about changing’ or you’re shopping, it helps – if they know you’re thinking of leaving, they’ll give you the best rate, and the goal now is to find as much cash flow as possible.”

Check out federal programs like the Low Income Home Energy Assistance Program, which helps cover bills, and Lifeline, which can help with phone bills. If you are not sure if you qualify for any federal or state program, you can call 211, which will connect you with a local professional who can help you.

Switch your grocery shopping

Buying groceries with a meal plan, buying generic instead of name brand or buying in bulk are some of the recommendations from the Consumer Federation of America.

“A lot of stores have price matching, so if you show them that a competitor is selling the same product at a lower price, they will match,” McAllister Young said. “You also want to look at the stores closest to you, so you’re not spending the extra money you might save on gas.”

An alternative way to save money on groceries is to check out food-sharing apps like Olio, which connects people around their community to share extra groceries, and Too Good to Go, where customers can buy corporate surplus food at a discount.

Look at government assistance programs

Even with these saving and spending practices, a month’s wage is not always enough to cover important expenses. If this is your case, programs across the country are available to help you.

“Sometimes there just isn’t enough ‘end of the month’ at the end of the month,” said Michael Best, an attorney at the National Consumer Law Center who works on financial services cases.

To take advantage of these resources, see if you qualify for the Emergency Rental Assistance Program, Supplemental Food Assistance Program, Farmers Market Nutrition Program, or Homeowners Assistance Fund. All of these are federal programs coordinated by state governments. Some states offer additional local programs for their residents.

Looking for community help

If you are food or housing insecure, find nonprofit or community organizations around you. From subsidizing housing and food banks to helping utilities, nonprofits across the country can help. National organizations such as Feeding America host food banks in all 50 states.

“We are already seeing the community reach out to us in huge numbers because of what is happening in the country in terms of economic stability,” said Kavita Mehra of Sakhi for South Asian Women, an organization that helps survivors of domestic violence in New York City. .

Her organization provides housing, food, and emergency cash assistance to people in the community. Between January and June, she said, her group distributed more than $150,000 in emergency cash assistance to survivors who had the most trouble turning out the lights and putting food on the table. This is more than last year.

Food aid organizations such as Ample Harvest, Hunger Free America, and Food Rescue US offer maps that allow users to search a nearby food bank by typing in their zip code.

Take care of your mental health

Between worrying about bills and not knowing what your financial future might look like, your stress levels can go to the surface.

“It’s a feverish presence,” Galleon said. “You have to do a lot of management, and you have to keep calm, for the sake of your mental health.”

Debra Kesen, clinical director of the Light On Anxiety CBT Therapy Center, recommends first recognizing when your body is under stress. Then she recommends mindfulness exercises such as breathing, touching a wall to calm yourself, and completing the “Five Senses for Anxiety Relief” exercise.

Most health insurance covers some form of mental health assistance. If you don’t have health insurance, you can search for therapists on a graduated scale across the country, including through FindTreatment.gov and the American Anxiety and Depression Association directory.

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