7 Steps To Recession-Proof Your Finances | FaithFi
October 1, 2024
7 Steps To Recession-Proof Your Finances
Faith & Finance with Rob West
Are you worried about a recession? Some economists say there’s still a 35% chance it could happen in 2024.
People often ask, “Will we have a recession?” The answer, of course, is “Yes.” We’ll always have another recession—the real questions are, “When?” and “Are you prepared for it?” If you’re not, now’s the time to get started.
With the economy showing signs of slowing down, preparing yourself financially for a potential recession is essential.
Are you worried about a recession? Some economists say there’s still a 35% chance it could happen in 2024.
People often ask, “Will we have a recession?” The answer, of course, is “Yes.” We’ll always have another recession—the real questions are, “When?” and “Are you prepared for it?” If you’re not, now’s the time to get started.
With the economy showing signs of slowing down, preparing yourself financially for a potential recession is essential. Here are seven practical steps to “recession-proof” your finances and help you navigate uncertain times:
1. Check Your Credit Score and Reports
The first step is to assess where you stand financially by checking your credit score and obtaining your credit reports. You can access free credit reports from Experian, TransUnion, and Equifax at AnnualCreditReport.com. This gives you a baseline to track any changes and helps you negotiate with creditors if needed, especially if you face temporary financial hardship.
Having a history of on-time payments can work in your favor if you need to negotiate better terms in the future.
2. Use the Mayday Budget
In times of financial stress, focus on the essentials. The Mayday budget consists of four key categories:
Food: Prioritize simple, affordable meals and avoid dining out.
Housing: Make your mortgage or rent payment.
Utilities: Ensure essential services like electricity and water are covered.
Transportation: Keep your car running or pay for essential transportation.
Once these are covered, any remaining funds can be allocated to other bills.
3. Seek Additional Resources
If your unemployment benefits or savings run out, there are other resources available. Non-profit organizations and local government agencies often offer assistance programs. You can call 2-1-1 or visit 2-1-1.org to find services in your area.
4. Communicate with Creditors
Be proactive with your creditors. Create a list of all your creditors and their contact information, and be prepared to call them if your financial situation worsens. Explain your situation in detail, providing pay stubs to show your reduced income, and ask if you can make partial payments or temporarily stop payments.
Keep a record of every conversation and ask for any agreements in writing. This can prevent confusion and protect you from scams. Remember, legitimate creditors won’t ask for sensitive information over the phone or email.
5. Get Professional Help with Credit Card Debt
If you’re struggling to keep up with credit card payments, seek help from non-profit organizations like Christian Credit Counselors. They can help lower your interest rates and consolidate multiple payments into one manageable amount. This form of debt management helps pay off debts faster without the risks associated with debt consolidation.
6. Save as Much as Possible
Building up your emergency fund is critical during a recession. Aim to have 3 to 6 months of living expenses saved. This cushion can help cover essential costs like food, housing, and utilities during periods of unemployment or reduced income.
7. Pray for Wisdom
Finally, don’t forget to pray. God promises in James 1:5 to give wisdom generously to those who ask. Pray for guidance in managing your finances, and trust that God will provide for you during difficult times.
By following these steps, you can take meaningful action to protect your finances during a recession. Preparing in advance, maintaining open communication, and seeking God’s wisdom will help you navigate whatever financial challenges come your way.
On Today’s Program, Rob Answers Listener Questions:
Does the Bible speak about retirement at all? I’ve never read anything regarding it in Scripture besides referring to Levites and Priests.
I'm reluctant to start shopping again for insurance, auto, and home. My premiums went up 31% this year, and I had just changed to another insurance company last year. I have no claims, and I just wondered if that seemed to be the pattern across the country or maybe for this region. Do you have any thoughts?
My husband opted out of Social Security back in the 1980s. He's a pastor who works part-time. Now he's retired, and I wonder if he can get back into Social Security if he gets enough credits.
My mom just passed away, and she left the house. She has a mortgage of $125,000 on it, and the loan is a VA loan. I don't know what to do with this property, so any advice would be greatly appreciated.
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