When the economy feels unstable, people typically feel the impact on their finances. A report from the National Foundation for Credit Counseling found that 57% of adults say economic uncertainty keeps them from reaching long-term goals. More than half (53%) say unexpected setbacks regularly disrupt their progress, and 43% report that just staying financially stable can be a challenge.
To get ahead, follow these simple steps for financial preparedness.
Identify Your Essential Expenses
Your rent or mortgage, transportation expenses, groceries, and other household expenses are considered essential. But nonessentials, like streaming service subscriptions, eating out, or other types of recreation that cost money are things you can cut back on when your wallet is feeling the pinch. Cutting back on nonessentials can give you the extra money you need to pay down debt or put some dollars back into the bank account.
Tackle Your Debt Strategically
Take a close look at your debts and figure out which carry the highest interest rates or the biggest penalties if you miss a payment. Paying those off first can save you money and protect your credit. If needed, talk to your credit card company about hardship programs or forbearance options, which let you temporarily lower or pause payments. Just keep in mind that interest may still add up.
Start Building Your Safety Net
Saving money is an important step in creating a safety net during financial uncertainty, and it's especially important when planning for the future. The 80/20 rule advises paying 80% of your income toward your household expenses each month and 20% towards saving.
Get Professional Financial Help
Make an appointment with a certified credit counseling agency and work with a credit counselor. They can help you budget, goal plan, and provide greater financial literacy. If you’re struggling with debt, they can also enroll you in a debt management plan. This allows them to talk to your lenders to reduce your interest rate and combine your credit cards into one monthly payment—to be paid off in three to five years.
Bottom Line
An unpredictable economy can be unsettling, but by knowing your essentials, carefully managing your debt, saving, and getting help when needed, you can prepare to weather your finances with confidence and stability.