The Coronavirus (COVID-19) pandemic has spurred a surge in financial anxiety, with many signs pointing to the beginning of a deep, lengthy global recession.

The stock market has taken a sizable blow. The federal government has warned of a potential 20 percent unemployment rate in the near future. Nearly 80 percent of people across the U.S. were already finding it hard to pay their bills at the end of the month. None of this will help reduce their financial anxiety. Or yours.

A recession is unquestionably a hard time, but you can survive the situation by anticipating hardships early and planning for the future. With that in mind, here are five key strategies to help you brace for these uncertain times:

5 Strategies to Brace for a Recession

1. Rethink Your Financial Situation

One of the toughest parts of a recession — not to mention a worldwide pandemic — is not being able to predict what comes next and when your situation will improve. That’s why it’s so crucial to be precise about where you stand financially. These are some of the central questions you’ll need to answer as you take stock of your fiscal situation.

• How much money do you have on hand?
• How much money can you obtain quickly, if you need it?
• How much debt do you currently have (credit cards, student loans, etc.)?
• How much are your basic monthly living expenses, including food, shelter, health insurance, transportation, childcare?
• Do you have any major life events (weddings, a baby, retirement) coming up with significant expenses attached?

Now is the time for you to understand what you’re spending today and to anticipate your needs over the next six months. If you’re well-prepared for a recession, job loss or some other financial catastrophe, you’ll have an emergency fund that covers three to six months of living expenses (and hopefully a healthy nest egg for retirement).

If you don’t have at least 3 to 6 months of basic expenses in cash, then set that as your financial goal. Start by developing a basic understanding of how you are spending your money and building a budget.

To start building a budget, figure out your total income, including your income, your spouse/partner’s regular income and any side hustles you do to bring cash into the household. You should also include your investment income and any other sources of income, such as child support. Next, list your monthly expenses, including your rent or mortgage payments, utilities, groceries, pharmaceutical or medical needs, child care costs, home or auto maintenance, debt payments and insurance premiums, and anything else you regularly pay for, including expenses you might only pay annually. Add up all of these expenses to understand whether you’re spending more, less or the same as your take-home pay each month. Finally, prioritize your essential expenses and make sure you understand what is the absolute minimum you can spend in a given month to get by – just in case you or your spouse/partner loses their job.

Your budget may need to adapt in preparation for a recession, and that’s okay. Try to cut down on non-essential spending, like entertainment, cable, and clothing. While it’s unrealistic to think you can cut out all discretionary spending, it’s important to separate wants and needs. Look for areas where you may have overspent recently, and try to figure out why that happened. You might not have extra money to put toward your retirement or a down payment right now, which is alright for the short-term.

Once you get in the habit of consistently reviewing your finances and looking for problem areas, you’re off to a great start.

2. Pay as Many Bills as You’re Able to

You might be worried about paying off outstanding debts in the coming months, like credit card bills, utilities or student loan debt. If you experience a loss of income, you might have to forego paying one or more of these bills, so it’s important to understand what are the most important bills you need to pay.

Because if you lose income, you may not be able to pay every bill on time, and in full every month. And, that will have a direct impact on your credit score. While normally we suggest doing whatever you can to keep your credit score intact, that may not always be possible. So, you should prioritize how you pay your bills, so the cash you have covers as many bills as possible.

1. Make sure you pay your rent or mortgage on time and in full. You don’t want to face foreclosure or getting evicted.
2. Make your car payment, especially if you need a car to get to work.
3. If you’re facing an income reduction, contact your student debt lender and ask for a hardship application, which should buy you a few months where you don’t have to make a payment.
4. Make at least your minimum payment on your credit card, if possible. If not, contact your credit card company and try to work out a payment plan. (Just know if you do this, the creditor will likely freeze your credit card, which will prohibit you from charging anything else on the account.)
5. While your medical debts are important, your health insurance will continue even if your medical bills grow. But if you buy your own health insurance, make sure you pay your premium on time so your policy isn’t canceled.

Remember, if you’re falling behind, reach out to your creditors right away and ask for hardship concessions. This might include making interest-only payments on your debt or putting payments into forbearance.

You can also check out your local bank or credit union for a personal loan. There are online lenders as well, and your own employer may offer a short-term loan program in times of trouble.

If you’re making your payments on time, you can also ask your credit card company or any other lender about lowering your interest rates. A significant number of major utility providers offer programs that might allow you to pay your energy bills at a later date or offer hardship assistance. You’ll never know what agreement you and your creditor can reach with if you don’t ask.

3. Take Advantage of Local and Government Assistance 

Fortunately, many local, state and federal governments will take action during a recession to provide relief to those in need. For instance, during the Coronavirus COVID-19 crisis, the federal government is considering all sorts of assistance, and announced that taxpayers will automatically get a delay in paying their tax bill (although you still need to file on time) and the Department of Housing and Urban Development announced a 60-day moratorium on foreclosures and evictions.

On a smaller scale, community organizations like food banks and places of worship will often try to help anyone struggling. Check with your local government as well as community activist groups to see if there are resources in your area for your specific needs.

4. Save as Much as Possible Into Your Emergency Fund

Even if job cuts or layoffs are looming, keep putting away as much cash into your emergency fund as possible. You’ll need every bit of it when the income stops flowing. Give up all the extras, including takeout and delivery. Try to live as lean as you can, so your cash goes as far as you need it to.

While taking money out of your emergency fund is never a decision you should make lightly, losing a job or being forced to live on a lower salary certainly qualifies as a good reason to use the cash you’ve stowed away. However, it’s important that you start to rebuild your emergency fund as soon as your financial situation is more stable. Otherwise, when the next emergency hits, you might have to make tough decisions, like taking money out of your retirement account or borrowing a line of credit from your home equity.

5. Keep Tabs on Your Financial Situation – and Make the Most of the Guidance We Have at Best Money Moves

The next few years may be uncertain, but the best thing you can do is take proactive steps now to prepare yourself. To help you stay on top of your finances in these stressful times, Best Money Moves is your partner in financial wellness. You can trust us for reliable information on need-to-know topics. Financial education is important now more than ever so you can feel good about where you are with your money, regardless of any challenges ahead.

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