You'd have to live under a rock to be unaware of the recession the United States is living through at the moment. Instead of feeding into the media and panicking, there are a number of things you can do to prepare yourself for difficult financial times. Staying calm results in the ability to make intelligent decisions regarding your finances. Panic leads to mayhem and rushed decisions that you will probably regret later.
Income and Expenses
The unemployment rate has reached an all time high and keeping your job is likely to be your first priority. If there is opportunity to put in a few extra hours or go the extra mile – there has never been a better time to show your employer that you are committed to the success of the company. It could be the ticket that keeps you employed when others are laid off.
If you are laid off, update your resume and hit the pavement, as they say! Contact friends and associates and let everyone know that you're currently looking for a job. You never know where a good job lead may come from. In the meantime, or perhaps as an alternative to a “job”, you might decide to freelance or work on contract. If your skill set allows you to work on your own (graphic design, programming, writing, house cleaning, etc) start working on getting the word out that you're available and landing some clients.
A recession is a good time to closely analyze your expenses and see where your money is going. Can you cut back? Most people can cut back on living expenses. Do you have high interest credit cards? See if you can consolidate them with a 0% APR balance transfer promotion, or pay them with a personal loan to save money on interest and lower your monthly payment.
Reduce your spending as much as you can and save the money. You may need it for emergencies or unexpected expenses. You may need it if you get laid off and have trouble finding another job. Here are 55 ways to save $1 per day to get you started.
What to do with your Money During a Recession
Your 401K and other investments are probably losing money. Don't stop saving for retirement. The closer you are to retirement, the harder your decision may be and it may make sense for you to make adjustments or pull your money out of it's current investment vehicle. If you have several years before you retire, however, don't sell out over the fear. When the market comes back, your money will bounce back.
Do whatever you can to build up an emergency fund. Having some money in the bank can help you float by if you do lose your job or find it difficult to obtain credit when you run into a financial emergency.