In a recession, it can be difficult to save money while still managing to provide the necessities of life. But it is possible to save money and build up a small nest egg even during these uncertain times. The key is to be mindful of your spending and be creative in your approach to saving. There are five key ways to save money in a recession, including budgeting, using cash instead of credit, negotiating prices, and more. Following these tips and strategies can keep your money safe during an economic downturn.
Budgeting
One of the most important steps you can take to save money in a recession is to create a budget and stick to it. Make sure to include all of your expenses and income, and be realistic about what you can afford. If you have never budgeted, start by tracking your spending for at least a month to get a realistic picture of your true spending and adjust from there. This will help you determine how much money you can set aside for savings each month and make sure that you are able to cover all of your bills. Once you have a budget in place, try to avoid impulse purchases and stay within your budget.
Cutting Expenses
Another way to save money in a recession is to reduce your expenses. Take a close look at your budget and see where you can make cuts. Consider cutting out unnecessary expenses such as subscription services, eating out, coffee runs, and entertainment. You may also want to look at ways to reduce your utility bills, such as using LED light bulbs, unplugging appliances when not in use, or using cold water to wash your clothes. These small steps can add up over time. In addition, by cutting your expenses, you can put more money into your savings to create a buffer in your account in the event of an emergency.
Cutting expenses doesn’t mean you have to cut out all fun in your life. Try to find economical and fun ways to do what you enjoy. For example, if you are cutting out eating out, try to find a recipe that you cook at home. You can save money by doing this and create memories at the same time.
Using Cash Instead of Credit
When it comes to saving money in a recession, it’s important to avoid using credit cards, especially if you cannot pay off your balance. Credit cards often have high-interest rates, and it’s easy to rack up debt if you’re not careful. Instead, try to use cash for most purchases. This will help you keep better track of your spending and make sure you’re not overspending. If you don’t like using cash, consider using a debit card or think of your credit card as a debit card. Avoid paying additional money on interest so either pay off the credit card each month or use a debit card to have the convenience of a card without carrying around cash.
Taking Advantage of Deals and Discounts
When it comes to saving money in a recession, it helps to be mindful of any deals and discounts on your day-to-day shopping. Many grocery stores offer discounts for signing up for their grocery club and deals on common groceries that you can bundle on top of your membership savings. Big retailers also offer coupons and promotional codes, usually for signing up for emails, to help you save money on your planned purchases. Make sure to unsubscribe from these emails. Look at the sale and clearance rack to find great deals as well.
Saving for Emergencies
Finally, it’s important to save for emergencies during a recession. This could include sudden medical bills, job loss, or other unexpected expenses such as a car repair. Set aside a portion of your monthly income and put it into a savings account. This will help you prepare for any unforeseen expenses that may arise. This extra money can be put into a savings account as an emergency fund by cutting your expenses. Ideally, try to have three to six months of expenses saved for emergencies to make sure you can cover your bills or other emergencies without going into debt.
Final Thoughts
Saving money in a recession can be a challenge, but it is possible with the right strategies and tools. Start by creating a budget and cutting expenses where possible. Next, make sure to use cash instead of credit, and take advantage of deals and discounts. Finally, make sure to set aside money for emergencies. By following these tips and strategies, you can protect your finances during an economic downturn.
Sara DeSantis
Community Resource Federal Credit Union