With growth slowing, climbing interest rates, and slowdowns in consumer spending, a recession may be near. Take steps now to prepare for an impending economic downturn and, in the process, set yourself up for financial comfort through the worst of it.
Get a Tighter Rein on Your Household Budget
Food prices are up more than 10% from last year. Gas prices are up nearly 60%, and rent prices are up 13.4%. As if these figures aren’t alarming enough, there is no indication that they’re going to plateau any time soon. If your household is already struggling, know that times are only going to get harder. Prepare for the impending struggle by getting a tighter hold on your household budget.
For starters, review your spending for non-negotiable costs, such as rent/mortgage, car payments, cell phone, basic food expenses, and utilities. Ensure you have enough in your account each month to cover these necessities. Next, look for areas where you can cut back. Think cable, high-speed internet, streaming services, and dinners out. While you don’t have to eliminate all the fun from your budget, you can save a substantial amount by prioritizing your wants and paying only for those that bring you the most joy.
Finally, spend with intention. When you purchase with deliberation, you will not only cut back on impulse spending but also, the items you do buy will be of real value. To complement your intentionality, read reviews and ratings ahead of time to ensure you purchase products that have staying power. For example, if you’re buying pet products,click here to learn more about high-quality items.
SMB and Small Business Cash Flow
As small businesses face similar challenges in a tight economy. SMBs are concerned about rising inflation, interest rates hikes and low economic growth with possible recession (mild or sharp) lengthy one does concern all types of businesses. Those economic strains coming from all directions will unlikely lighten up any time soon. Small businesses need to take prudent steps and prepare for a potential economic down turn. One item that needs to be handled with urgency is the amount of Debt and total book of receivables that a business caries. Taking steps to recover those debts and expedite the collection of any outstanding bills can help organization maintain a health cash flow and balance sheet. Utilizing software tools like D2R-Collect internally or using a third party debt recovery company insures that a business stays on top of this item
Get Creative with Your Spending
In addition to spending with intention, get creative in how you spend and on what. Instead of purchasing name-brand items, shop store brands. Often the store’s product is substantially cheaper than name-brand products.
Extend your creativity to your SMB or household spending. For example, forgo running your HVAC unit nonstop throughout the winter. Instead, put that fireplace to use. Simply find a local provider to deliver firewood.
Purchase a Home Warranty
A home warranty is a service contract that covers the repair or replacement of major home appliances and systems. It’s an optional contract you purchase that protects you from expensive, unforeseen repairs. During a recession, a home warranty can be beneficial because it can help you save money on repairs. For example, if your refrigerator breaks down, the home warranty will cover the cost of the repair or replacement. This can help you avoid having to spend money on an unexpected repair bill. In addition, a home warranty can give you peace of mind during a time when finances may be tight. Before purchasing a home warranty, carefully review your options for home warranty companies.
Pay Down High-Interest Debt
As of January 2022, Americans pay approximately $1,000 per debtor in interest annually. With the Federal Reserve set to raise interest rates in the coming months, carrying a balance from month to month is only going to get more expensive. The best thing you can do to avoid throwing away money is to pay off your debts as soon as possible. If you can’t pay it off all at once, start paying down accounts with the highest rates first. In doing so, you can save yourself months — if not years — of financial stress and thousands of dollars.
Take Up a Side Gig
If your income is simply not enough to live comfortably through increasingly expensive times, consider taking up a side gig. From dog sitting to digital marketing, and from ridesharing to grocery shopping, there are dozens of jobs you can do after work that can help you earn an extra $1,000+ per month.
Diversify your Business Products and Services
It is important for any business to adjust and take steps to expand their product and services offer. In some cases some even discontinue of line of product or services in favor of another that is more suited to current economic situation and future outlook. Business will be well serviced in investing in future potential growth than just waiting out the economic turbulence.
We may be in a recession in the near future or facing high inflation and high interest rates. By taking steps like tightening your spending, purchasing a home warranty, and working a side gig, you can sit comfortably through the worst of the times to come. SMBs that keep an eye on their balance sheet and cash flow with investment in future opportunities tend to come out on top during these times.
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