Losing a job is scary for anyone—especially if you haven’t attained financial independence. Not only do you have to figure out how to live without a job, but there’s the added stress of having to find a new one. Though it can be daunting to navigate unemployment, it is possible. Keep reading to learn how.

Here are some key tips for managing your money when you are in-between jobs.

1. Cut back on your expenses

When it comes to how to live without a job the first thing we should all do is to reduce our living expenses by cutting our budget. This includes what we spend on housing, food, and other living essentials. These costs usually take up most of our income, so reducing them will help our money go much further.

Get rid of non-essential spending

Many times, we include things in our budget that we don’t need. These are luxuries that we treat ourselves to but aren’t necessary expenses.

So, when you need to figure out how to survive without a job, it helps to start with your non-essential items.

Some non-essential items to consider eliminating include:

• Subscription services
• Shopping
• Dining out
• Nail & hair appointments
• Entertainment
• Vacation

You can always go back to splurging on these things once you’ve established yourself in a new job. Or, you may find that you don’t want to incorporate them back into your spending.

Save on groceries

Food is another big expense that can cause stress when finances are tight. Of course, you need to eat, but you may have to change what you’re eating and where you’re getting it from.

Here are a few simple ways to reduce food spending and start grocery shopping on a budget.

1. Meal plan

Meal planning is when you create a menu for what you’ll eat for the week. It allows you to shop specifically for those ingredients without wasting money on others you don’t need. I like to think of budget meal planning as having a budget for my food. It’s something I’ve learned how to do consistently to save money over time.

2. Meal prep

When you meal prep, you prepare all of your meals ahead of time. It not only allows you to save time, but you save money by not buying fast food or dining out.

Meal prep helps eliminate the need to buy extra food because it’s already available. And to save more, you can create frugal meals.

Sunday afternoons are the perfect time for me to do my meal prep to prepare for the week ahead. So pick a time where you have a few hours to spare to prep and cook your meals for the week.

3. Use coupons

If you haven’t used coupons for groceries before, now is the time. Look through the best coupon websites or in grocery store’s weekly ads. Saving a few dollars can go a long way.

I make it point to browse my grocery store app for sales and do a quick online search for coupons before I go food shopping.

You can also try to find coupons for all your other shopping needs e.g. for clothing, personal care items, cleaning products etc.

Reduce utility costs

Utilities include the cost of electricity, water, gas, and more. These costs typically fluctuate throughout the year based on the season and are determined by usage.

However, we can all do our part to reduce costs by monitoring our usage.

Simple things like turning off lights when they’re not in use, not idly running the water, and even turning off our heating or air conditioning while we’re away can make a difference.

Implementing these small changes can help reduce your monthly costs while you figure out how to live without working.

Get a roommate if you have the space to spare

The easiest way to reduce living expenses is by cutting them in half.

You can do this by getting a roommate. A roommate can help share some of the expenses and split rent bills so that you can save your money while finding a new job.

So if you know someone looking for accommodation and you have the space to spare, consider renting a room to them.

2. Contact lenders and creditors

Without a job, the priority is ensuring you have your essentials covered. That means any other expense, including debt, should be reduced, eliminated, or deferred.

In addition, as you navigate how to live without a job, you can always contact your lenders and creditors to work out payment arrangements.

Here are some specific things you can do if you are unable to pay your bills.

Ask to defer payments or do a hardship plan

Your lenders can arrange to defer your credit card debt payments due to a job loss.

Your payments will be paused and resumed at a later date. This can be a great help if you are figuring out how to live without a job.

Deferring payments or a hardship plan could apply to credit card debt, car loans, student loans, etc. You may also look into mortgage forbearance if necessary.

Ask for a reduced minimum payment

You may also ask to have your minimum monthly payments reduced. Though this may mean that the length of your debt repayment is extended, it can temporarily relieve you of some expenses.

Ask to reduce or temporarily remove interest

The interest on loans makes the payments significantly more than the original loan amount. Lenders can also reduce or temporarily remove interest so that you don’t accrue more debt and have a smaller payment.

3. See what benefits you qualify for

You may be able to qualify for some benefits, that can assist you with income as you plan out how to live without a job. Most governments and community organizations have assistance programs to help in these situations. See below:

Ask about severance (if not communicated)

Before leaving an employer, knowing if you will receive a severance package is important. A severance package is a financial payment and other benefits extended to an employee who has been laid off. The amount is usually based on your time with the company, and not all employers provide it.

Check with your human resources department or employer to determine if you will receive this benefit.

Apply for unemployment benefits

If you have been laid off from your job at no fault of your own, you may qualify for unemployment benefits.

Each state has different requirements; however, the premise is that you will receive a percentage of your former salary as you look for a new job.

Consider government assistance programs

If you still cannot afford your basic life necessities, the US government has assistance programs. Specifically, there is the Supplemental Nutrition Assistance Program (SNAP), which provides food assistance.

The program provides financial assistance to help people pay for food for themselves and their families. Each state has different requirements to apply and to determine eligibility.

You can find out more on the SNAP website.

Several rent assistance programs are also available if you are struggling to keep up with paying your rent.

You can also explore your state’s Temporary Assistance for Needy Families (TANF) program.

Consider continuing health coverage

Your previous employer likely provided your health insurance coverage.

So once you became unemployed, you also lost your health insurance coverage. For these situations, leverage COBRA.

The Consolidated Omnibus Budget Reconciliation Act (COBRA) allows you and your family to remain on your employer-sponsored health plan for a limited time after your employment status has changed. With COBRA, you will be required to pay the monthly premium that your employer subsidized.

You should research your individual situation to see if the cost of continuing your health coverage is cheaper/better than finding insurance elsewhere. It could be more expensive to keep your old employer’s insurance. Every bit of money you can save counts when you’re figuring out how to survive without a job

4. Find ways to make side income

How to live without working is a big question for anyone to answer, and supplementing income will be crucial. Even with taking all of the steps to reduce expenses and get assistance, you may still want to bring in another income stream as a short-term solution.

Here are some ways to make money without a job.

10 side gig ideas

Starting a side hustle or gig is nothing unusual in this day and age. Even those with full-time jobs sometimes find it necessary to take on additional work to make ends meet.

These flexible gigs are great for extra money, especially if you’re figuring out how to live without a job. Even if the income from your side gig is lower, it’s still worthwhile because it brings in something.

Some might even consider becoming self-employed as a part-time gig. There are plenty of options to be your own boss, from internet jobs like starting a blog or becoming a writer to opening a cleaning business or doing yard maintenance.

Check out these ten ideas for side gigs if you aren’t sure where to start:

1. Food and grocery delivery

Many people don’t have the time or resources to go to the grocery store, so they hire someone to bring their food to them. You can do anything from delivering pizza to shopping and delivering groceries with a company like Instacart.

2. Car share driver

Drive for Uber to pick up some extra cash. It’s a fun way to make some money and help people to get around your city easily.

3. Virtual assistance

Help others to stay organized. General virtual assistant skills include making schedules, answering emails, and handling administrative tasks.

You can work from home and make an income. Use this list of the best virtual assistant companies to help.

4. Freelance marketing

If you excel at content creation and social media, consider freelance marketing. Building up a list of clients may take some time, but you can probably work from anywhere and make a good side income.

5. Server

If you’re social and like a fast paced job, becoming a server in the evenings or on the weekend can be the perfect thing. Check your local restaurants and see who’s hiring, to help you with how to live without a job.

6. Graphic design

If you are an artist or designer, graphic design is easy to do as a side hustle. You can get started by signing up with Upwork to find clients who need design work for their businesses.

7. Pet sit

Are you an animal lover? Pet sitting is not only fun and fairly easy, but it can pay well! Watch people’s pets while they’re away on vacation.

Start dog walking or sitting in your neighborhood using apps like Rover.

8. Deliver newspapers

Yes, newspaper delivery still exists! Check with the circulation department for the paper to see if they need someone to deliver. It’s a good way to enjoy the fresh air and make some money.

9. Sell crafts or handmade goods

If you have a flair for all things creative, making crafts or handmade items to sell can make you a good side income! Try setting up an online store or even selling at local craft fairs. Sell candles, knitted blankets, or any other items you are talented at making!

10. Rent out your car or parking space

If you have a car you don’t use much, or a parking space you don’t need in a busy city, both can make you money, and with little effort. Rent out your car on days you don’t need it using Turo. And if you want to rent your parking space, check out Neighbor.

There are tons of other ways to make money online and in-person. We even have a book dedicated to helping you build your side hustle.

Find something that compliments your skills and available resources, and start making extra cash!

Sell unused items in the house

A simpler way to earn extra cash is to sell unused items in your house. Platforms like Amazon allow you to sell these goods online.

No need for a yard sale when you can simply post your listings on a site. Of course, if you want quick cash, then having a yard sale is always a good option.

Airbnb additional space in your home

Those of us with extra space in our homes may consider advertising our homes on Airbnb. We can temporarily rent out our spaces to travelers to help subsidize our expenses as we figure out how to live without a job.

It’s important to be cautious when considering this as an option. Nonetheless, Airbnb has proven to be a viable solution for making additional income.

You can also choose the schedule you want for guests in your home. And remember, it doesn’t have to be a long-term solution, but just something to get you the amount of money you need for now.

Expert tip: Prioritize your health to reduce stress

Figuring out how to live without a job can be a stressful and challenging experience. Though there are steps that we should take when considering our finances, our health is equally important.

When I need to process how I feel about something, I like to spend time journaling or talking to a trusted friend.

In addition, I prioritize exercising and eating well. Doing this keeps my physical and mental wellness in a good place, which can be especially helpful if you are processing the loss of a job and income.

How do I cope without having a job?

When you are coping with something like job loss, it’s important to focus on the positives and what is within your control.

For instance, you can apply for a certain number of new jobs each day and engage in meaningful tasks and hobbies to keep your spirits up.

You might try gardening, yoga, spending time with loved ones, and other enjoyable pastimes.

Focus on bare-bone budgeting, being frugal, and continue to look for opportunities to make extra income.

What to do if you are broke and unemployed?

If you are broke and unemployed, the first step is to create a more secure financial situation. Once you do that, you’ll have breathing room to think about what’s next.

Start by selling items around the house, take on a side job, or get a roommate to earn an income.

If you have to leverage debt until you find a new job, be as frugal as possible and stick to a budget. Once your income is restored, you can lay out your plans to start paying off this debt.

Be intentional about looking for a new job and networking with friends and past colleagues. Soon, you’ll be back on your feet and earning a paycheck again.

How long can you be unemployed?

How long someone can be unemployed depends on their financial situation. Those who have a large emergency fund or a second income may be able to be unemployed indefinitely or for several months without much of a problem.

However, others who don’t have much savings and rely on a single income will need to find a new job quickly to avoid going into debt or having financial struggles.

I think it helps to create a financial buffer while employed, if possible. Having extra money helps us to avoid feeling stressed should something happen with our current job.

If you are currently unemployed and desperately need to bring in cash, you can consider taking on a short term job, even if it’s below your skillset, to help you get by in the short term.

Articles related to jobs and unemployment

If you found this advice about living without a job helpful, check out these other great reads!

• The Importance of Savings: How I Lived A Year Unemployed
• How To Deal With Long Term Unemployment
• Where To Find Rent Assistance For Single Moms
• Key Resources And Money Tips For Low-Income Families

Final thoughts on living without a job

There are many things that we can do to lessen the financial burden of how to live without working. So consider each of these tips and utilize them.

Additionally, remember to spruce up your resume, learn new skills (there are so many free resources online), and network to help you find a new job quickly.

You can always join our community and take our free financial courses to get help and support as you navigate your transition. Remember, when it comes to how to survive without a job, you can weather through it.

The post 4 Tips On How To Live Without A Job appeared first on Clever Girl Finance.

It’s important to understand what to do if your identity is stolen. Lately, it seems like every few months, there is a news report about a security breach. These breaches can potentially make people susceptible to identity theft and credit fraud.

Someone can steal your identity in multiple ways, from a lost wallet or purse to using public Wi-Fi. Thieves may even steal your information from ATMs.

All this can leave many wondering what to do if someone steals your identity, furthermore, how to know if your identity has been stolen. Knowing that security breaches can and do occur, here are some key things you need to do.

You can minimize the impact and protect yourself from potential credit fraud when you know how to report identity theft.

15 Steps for what to do if your identity is stolen

If someone steals your identity, this can affect many things. It can compromise your personal information, from debit cards to types of bank accounts, bank account numbers, and driver’s license numbers.

Because this can happen without you realizing it, preparing and knowing how to report identity theft is essential.

From knowing the answer to “How do I file a police report for identity theft?” to “How do I notify the post office?” you’ll find answers here.

You can take many preventative measures, such as having insurance and identity theft protection services, monitoring credit reports, etc. Also, find out where to look to see if theft has occurred.

Unfortunately, victims of identity theft have to work hard to fix a problem they didn’t create. However, having preventative measures in place can help with ID theft.

1. Check your credit immediately to confirm if your identity was stolen

If you have concerns about identity theft and want to know what to do if your identity is stolen, check your credit immediately with a free credit report. You want to make sure everything on your credit report is as expected.

Get your free credit report

You can access a free copy of your credit report from all 3 credit bureaus each year via annualcreditreport.com.

Many banks are also now offering this service for free with your accounts. 

Alternatively, you can choose to pay for one.

The bottom line is that you must stay on top of checking your credit to ensure nothing strange is happening there, so checking copies of your credit report reasonably often is smart. If things are amiss, keep reading.

2. Alert the credit bureaus immediately

Alert the credit bureaus to report the situation and place a fraud alert or freeze on your credit reports to prevent additional damage.

A credit freeze (or security freeze) lets you restrict access to your credit report. A freeze means lenders cannot access your credit to approve any unauthorized lines of credit until you remove the freeze.

You can get a freeze on your credit from each of the 3 major credit bureaus – Equifax, TransUnion, and Experian.

It’s a good idea to learn how credit works and check in at least once a month, regardless. If you’re wondering does checking your credit score lower it, checking your credit does not impact your score.

3. Get a credit monitoring service in place

Just because a breach happened does not mean identity theft or credit fraud will happen immediately.

With what to do if someone steals your identity, know that it could take months or years before you are affected.

If a security breach impacts a company, e.g., Equifax, they may offer free credit monitoring for some time.

However, several other companies can do this for you as well. 

How credit monitoring helps you

Credit monitoring is a big part of understanding “How does credit work?” Credit monitoring will alert you when someone applies for a line of credit or adds one in your name. The monitoring will help you track exactly what’s happening with your credit.

Remember that even if you have a credit freeze, it’s a good idea to have credit monitoring because fraud could happen on your existing accounts, which a credit freeze does not impact. 

However, a credit freeze will prevent credit card companies or credit card issuers from accessing your account for new credit.

Putting an extended fraud alert on your credit report also protects you from fraud. You can choose how many years you keep the fraud alert in place, which means creditors will take more time to verify who you are before giving any credit. An extra step like this can make you aware of potential future identity theft.

4. Report the problem to the FTC

As soon as you realize your identity is stolen, you should report it to the Federal Trade Commission (FTC) right away.

By making this report to the FTC, you’ll get guidance on creating a recovery plan. They explain that they’ll provide you with guidance on how to:

• Close new accounts made in your name
• Remove charges you didn’t make from your accounts
• Clear your name of criminal charges
• Manage theft on specific accounts, e.g., government benefits, student loans, bankruptcy filed in your name, etc.
• Fix your credit report

By filling and documenting this report quickly, you may also be able to limit your financial liability.

5. File a police report

Identity theft is a crime. So you’re probably asking, “How do I file a police report for identity theft?”

When figuring out what to do if your identity is stolen, a police report from your local law enforcement agency can help support any claims you file to dispute theft.

By filing a report with your local police department, you may also be aiding the police in fighting existing identity theft cases.

When you file the police report, be sure to have a copy of your FTC report and proof of your stolen identity, in addition to your address and ID, according to US News.

You’ll also want to get a copy of this report to share with the credit bureaus, creditors, and service providers to keep on record as part of your case file.

So now you know the answer to, “How do I file a police report for identity theft?” and you’re one step closer to getting your life back to normal.

It’s also a really good idea to file an additional report with the Federal Bureau of Investigation (FBI) as they also investigate financial fraud cases.

6. Get access to any documents related to the identity theft

To better prepare, you should gather all the documents associated with the theft. It’s also a good time to learn how to declutter paperwork!

You can write a request for the documents to the company where the theft happened, and you must also include a police report, an FTC identity theft report, and identification when you do this, according to the FTC.

7. Be sure to notify the IRS

You must also make the IRS aware of any identity theft. Someone could attempt to use your information to create a fake tax return and get money from a tax refund.

You can go to the Internal Revenue Service website to find out what to do if your identity is stolen. In addition, you’ll find out how to notify them about the fraud.

8. Let the DMV know

You’ll find out there can be problems with your driver’s license also, so it’s essential to understand what to do if someone steals your identity related to your license.

If you suspect someone has stolen your license, contact your local Department of Motor Vehicles and inform them about the situation. You can add a flag to your license to prevent fraud.

9. Notify your health insurance of the fraud

When deciding what to do if your identity is stolen, you’ll find that you may also need to let your health insurance company and providers, etc., know about the fraud. Someone may be trying to use your insurance for medical procedures or medicine, so telling the insurance companies is helpful.

Look through your medical records and ensure everything is accurate, and report anything that isn’t to your health care provider, according to the FTC.

10. Contact the Social Security Administration

You should also inform the Social Security Administration if someone steals your identity. 

If you think someone could be using your social security number, you can contact the Social Security Administration (SSA). They can check their records to make sure there isn’t any fraud.

11. Contact the post office

Be sure to contact the post office as well. Contacting them helps to ensure that no one tried to authorize a change of address in your name. 

You can also fill out paperwork to make sure they are aware of the situation and have a record of the theft.

12. Change online passwords and pins associated with your financial information

Changing the passwords or pins you have associated with your personal and financial information is a good idea as soon as possible.

You may not know exactly what information the thief took, so it’s better to take all precautions, and this is one of the smartest money habits, too.

You can set calendar reminders to change your passwords every few months. Make sure that you create strong passwords that are not easy to guess. Also, avoid using devices you don’t trust.

13. Contact your creditors and service providers

You’ll also want to report the situation to creditors or service providers. You can then begin the dispute with them for fraudulent claims in your name.

You can provide the FTC and police reports you filed to them as well to help further validate your claim. Identity thieves can set up services like utilities in your name, so contacting your service providers is essential.

Also, notify companies reporting inaccurate information to the credit bureaus due to identity theft. That way, you can stop the effects on your credit score.

14. Review your bank and credit card accounts and statements

Take some time out to review your bank and credit statements for any discrepancies.

You may be able to catch the theft early by doing this. Especially if the transactions are not on your credit profile yet. Be sure to make your bank’s fraud department aware of the situation.

15. Look for any fraudulent accounts in your name so you can dispute and close them

As you review your credit profile, look for any fraudulent accounts in your name. If someone contacts you due to debt owed on a fraudulent account, provide them with your FTC and police reports.

You can also ask for the details about the account and file a formal dispute with them for any balances due.

If you can learn more about the identity thief, you can report this information to the police and FTC.

The FTC also provides sample letters to help you request that a debt collector stop collecting debts you don’t owe.

Expert tip: Create a plan to recover your identity

A stolen identity can mean weeks or months of headaches and frustration for you. If you’re a victim of ID theft, it’s important to quickly follow the necessary steps to get your life back on track.

However, some steps to recover your identity may take longer than others, and you likely don’t have unlimited time to deal with this inconvenience. Though you want to act quickly, it’s alright to take a few moments to make a plan to fix everything, one that works with your schedule. 

For example, you may need to call the credit card companies during your lunch hour tomorrow, file a police report on your day off, and review your statements over the weekend.

In many cases, taking the first few steps to get things back to normal , and planning to succeed, will help you feel better and give you the momentum you need to continue.

How to determine if your identity has been stolen

You can tell if someone has stolen your identity in a few ways.

Fraudulent transactions on your accounts

The first, and one of the most obvious, is if you notice any fraudulent transactions on accounts. 

If any information with your credit looks inaccurate, or you see information for accounts you didn’t open, this can be a sign of theft.

Your information in data breaches

Other ways to know if your identity is stolen, according to McAfee, are if you find that your personal information was in a data breach, you find out about a tax return in your name that you didn’t file, or you get mail at your address, addressed to someone else.

How to prevent identity theft

Ideally, you can prevent someone from stealing your identity instead of wondering what to do if your identity is stolen.

Don’t share personal information

Don’t give out any banking details or personal information to anyone you don’t know. 

Phishing scams (online scams that try to get your personal information) are a common way to steal identities, so avoid this by not giving any information to unknown sources or even sources you haven’t verified.

Even if the company appears legitimate, make sure it is the company you think it is and not a scammer.

Monitor your credit

Your credit is one of the first places you can check for a stolen identity. Monitor it by checking your credit score, tracking your transactions, and getting your free credit reports each year.

Get identity theft insurance

One thing that you can do to protect yourself is to get identity theft insurance for it. Insurance means you can continue your life and still be alright financially, even if you have to deal with a problem like this.

There are lots of things identity theft insurance can cover. According to LifeLock, it can include reimbursing you for stolen funds, replacing lost wages, and covering legal fees and other costs.

You can get this insurance from most insurance companies and the credit bureaus also offer insurance options as well.

What is the first thing you should do if your identity is stolen?

If you suspect your identity is stolen, you should first notify the credit bureaus and freeze your credit. That way, you can try to prevent further damage. There are several vital steps to take after that, but you can start there.

How do I start an identity theft investigation?

To start an identity theft investigation, contact the Federal Trade Commission. They can help you make a report and then start getting your life back to normal. Also, file a police report, which can help you start an investigation.

What are 3 steps to take after your identity has been stolen?

Three key steps to take after you find out that your identity is stolen is as follows:

1. Let the credit bureaus know you’ve been a victim of identity theft to avoid further credit damage. 

2. Inform the Federal Trade Commission, as well. They can help you figure out what to do next. 

3. File a police report about the identity theft at your local police department. You can also file a report with the Federal Bureau of Investigation (FBI).

These 3 steps can give you a simpler life and help you know what steps to take in the next few days and weeks.

Articles related to identity theft

If you found this article about what to do if your identity is stolen helpful, check out these posts next.

• Key Steps To Take Now For A Lost Wallet
• 10 Types Of Insurance You Need But May Not Have
• Credit Freeze 101: Should I Freeze My Credit?
• How To Rebuild Your Life After A Financial Downturn

Get your life back to normal faster by knowing what to do about identity theft

Don’t panic if your personal and financial information is part of a security breach. It’s frustrating, but if you take the above actions quickly, hopefully, you can minimize the impact on your finances by knowing how to report identity theft.

It’s also essential to take precautions even if you have not had your identity stolen. Be sure to store your financial records properly, know how long to keep financial records, and stay on top of reviewing your bank, credit, and service statements.

If someone steals your identity, don’t stall on taking action. The sooner you start addressing it, the quicker you’ll resolve it. And while you’re at it, be sure to review other aspects of your financial health including a financial check up.

The post What To Do If Your Identity Is Stolen: 15 Key Steps appeared first on Clever Girl Finance.

Hearing the word recession creates a feeling of discomfort for many. After all, recessions come with a lot of negatives, like stock market declines, job losses, and more. But you can learn how to prepare for a recession and still thrive financially.

Preparing for a recession is essential to your financial security.

Knowing how it affects the economy and your finances and taking key steps will help you during an economic downturn. Let’s get into what it all means and how you can prepare for a recession.

So, what is a recession?

A recession happens when there is a negative GDP for two consecutive quarters. During a recession, there is typically a decline in industrial and trade activity. Some major implications that come with recessions include job losses and a high unemployment rate. Also a drop in real estate values and a decline in investment values.

Economies work in a cycle. That means they go through periods of expansion and growth, as well as periods of decline known as recessions. Or, more severely, depressions such as the Great Depression in the 1930s.

One example is the great recession of 2008, which was triggered mainly as a result of the housing bubble in the United States.

It’s essential for us to know how to prepare for a recession, as it can impact our careers, lifestyles, and finances.

What changes during a recession?

Recessions can be damaging to stocks and assets, causing them to lose value.

A recession could also cause interest rates to drop. The Federal Reserve may decide to cut rates to make it cheaper to get loans and borrow money in an effort to try to stimulate the economy.

In addition, this means you will see rates drop on your savings accounts too.

The government debt may rise as they pass bills for stimulus packages to assist those in need. And also to help the economy recover.

All of this doesn’t mean you shouldn’t invest during a recession, though.

In fact, if you’re wondering is now a good time to invest, it can be if you do it right and work on tackling any stock market fear you might have.

How to prepare for a recession financially

Recessions happen, but you can be ready for them. Here are ten key tips for how to prepare for a recession.

1. Assess your overall finances

Before you start to make a plan for a recession, consider what your finances look like right now.

For example, what are you currently paying for in your monthly expenses list? You likely have some necessary expenses, such as your mortgage or childcare.

But are there things that you really don’t need or can afford to cut back on?

For instance, dry cleaning, hair and nail salon appointments, restaurants, etc. Perhaps you’re spending too much on non-essential things and living a champagne lifestyle that you can’t afford.

In that case, cut back for the time being so you can use your money for more essential matters.

2. Ensure you can cover your basics before you invest or pay debt

Perhaps you assessed your finances and found out some surprising things. If you can’t afford your current lifestyle, or you are struggling to pay your bills without debt each month, it’s time to make some changes.

For instance, before using my money for investing or paying off debt, I like to be sure that I can pay for all of my basic necessary expenses. Rent, groceries, insurance, etc., are all things to pay for before doing anything else with my money.

If you need to make more income to afford your basic bills, consider a side hustle or a second job. Then you can change your focus to paying off debt, investing, building an emergency fund, etc. Doing so can help you in your future by preparing you for a recession.

3. Bulk up your emergency savings and keep it easily accessible

As you work on getting your finances ready for a recession, it’s very important to have emergency savings in place. In a recession, having an emergency fund can save you a lot of stress. It acts as a safety net with enough money to help you during difficult times.

You’ll avoid becoming financially over-extended or having to leverage debt just to get by. The importance of savings cannot be overlooked!

Save 3 to 12 months of expenses

To start, you want to put aside 3 to 6 months’ worth of your basic living expenses in an emergency account in the unfortunate event that you become unemployed.

And since recessions can be pretty unpredictable, aim to boost your emergency savings to 12 months of your essential expenses to have extra money if needed.

That much cash will give you ample time to find a new job. But remember, jobs can be harder to come by in an economy experiencing a recession.

Keep in mind that your basic living expenses are the essential things you need to survive; food, housing, core utilities, and transportation. Building your emergency fund is one of the most important steps when preparing for a recession.

4. Diversify your investments

Ever heard the saying, don’t put all your eggs in one basket? Well, the same line of thinking applies to your investments.

It’s important to have a well-diversified investment portfolio, such as a 3 fund portfolio. That means your investments should not all be tied up in one stock or one real estate property.

You want to make sure your investments are spread across multiple industries and areas so that if one industry or area experiences a decline, one investment decision doesn’t sink your entire portfolio.

For example, if you invest in the stock market, you can spread your investments across multiple sectors such as consumer goods, healthcare, technology, etc.

Investing with index funds and mutual funds are both great ways to diversify. You can also choose to invest in the real estate market and in small businesses.

How to invest wisely

As an investor, be sure to do your research, be clear on your investment strategy and objectives, and understand how risk averse you are. It will create less panic for you if a recession comes along.

A big mistake people make is that they start selling every investment they own when the economy dips because of emotions like fear or worry. It’s a bad idea in the long run.

If you have a clear plan for your investments and you’re in it for the long term, you are in a good place. Your investment is likely to weather a bad economy and come out on top.

Talk to a financial advisor if you have any confusion or feel stuck regarding what to do. (Find out: do I need a financial advisor?) Prepare for a recession by diversifying your investments wisely.

5. Create a plan to pay off debt once your essentials are covered

The last thing you want to do is worry about having to pay off debt in a bad economy, especially with the increased rates of unemployment. When focusing on how to prepare for a recession, debt payoff should definitely be a factor.

Paying off your debt will save you a ton of money in interest payments and put you in a better financial situation. Plus, you’ll also be able to put your extra funds toward bulking up your emergency savings and other financial goals.

So, after your basic expenses are covered, as discussed earlier, you can start using your excess income to pay off debt or save.

Prioritize high-interest debt

It’s a good idea to focus on paying off your high-interest debt before you consider ramping up on investing (meaning investing more than your usual amount, though you should always invest some if you’re able to).

If you have high-interest debt the cost of your interest payments may far exceed the return on your investment.

For instance, if you have credit card debt that has a 19% interest rate, then it makes more sense to pay off that debt as soon as you can, given that the average long-term rate of return on the stock market is ~8% to 10%. Reduce credit card debt if at all possible.

Obviously, your rate of return could be much higher, but you want to avoid speculating or trying to time the market.

Once your debt is gone, you can focus on investing a higher percentage. Find out more about creating a smart debt repayment plan, like the debt snowball worksheet method, and learn how to start investing.

As a side note, if you have no other debt and your investments are on track, you might consider paying extra toward your mortgage to pay off that debt, too.

6. Refinance variable interest debt into fixed interest

Interest rates typically decline during a recession. That means you may be in a good position to refinance things like mortgages or think about the pros and cons of refinancing a car.

Having a variable interest rate means that it can change over time, so getting a fixed interest rate for any debt you have is usually ideal.

Take advantage of the possibility of debt being cheaper if it makes sense for you. Remember, refinancing only applies to the debt you already have.

A recession may not be a great time to take on new debt unless it’s necessary and you’re absolutely sure you can afford it. Always have a payoff plan, no matter what.

7. Learn how to budget and live within your means

Living below your means or at least within your means is the key to building wealth. It also means you eliminate having to leverage debt to live your life—no more using credit cards to pay your bills.

Find out how to prepare for a recession and still live within your means.

Use your budget to focus on financial security

Determine what budgeting style works best for you and learn better budgeting techniques. Your budget will help you track your expenses compared to what you earn and highlight areas you can cut back on.

Your ultimate goal should be to widen the gap between your income and expenses as much as you can. You do this by finding out how to increase your income and reduce your expenses. Spend on necessities instead of luxuries, as discussed earlier.

Any leftover money can be used to create financial security, which can primarily be achieved through saving, investing, paying off debt, and making your money work for you.

Make a plan about how much you want to save, what other income sources you can create, and how you’ll pay off debt. Then give all your attention and any spare money to those goals.

When you make progress towards your financial goals, refuse to upgrade your lifestyle. There will be time for that when you are in a better financial situation, but if you’re focused on preparing for a recession, then don’t spend on things you don’t need for now.

Continue with your plan, and you will be in a much better place with your money.

8. Find more ways to create multiple streams of income

Millionaires usually have several income sources, and for good reason. Creating multiple sources of income ensures that you increase how much you have coming in, and it can increase your peace of mind during economic uncertainty.

It also acts as a buffer in case you lose a source of income. Here’s how to get started with making more money.

Start a side hustle

Is there something you’re passionate about doing? Something you do that you get complimented on all the time?

Consider starting a side hustle to generate some additional income. There are also a variety of recession-proof businesses you can consider.

For me, starting a side hustle has helped me bulk up my savings, pay off debt, and just be generally more prepared for difficult financial circumstances.

Consider passive income opportunities

Setting up passive income sources is also a smart idea. Passive real estate investing like REITs (Real Estate Investment Trusts), royalties, and selling digital products like eBooks can all be sources of passive income that can help you in tough times.

Dividend investing can also be a passive income source, as can becoming a landlord. There are many opportunities, so as you consider the resources you have, find out which ones will work for you.

9. Dual income household? Learn to live on one income and save the other

One of the savviest financial moves you can make to prepare for a recession is to shift to living on one income and saving the other. Getting frugal with your budget and reducing expenses can free up a lot of money to save for a rainy day fund.

The goal is to reduce your cost of living enough to free up the second salary altogether.

You will bulk up your emergency fund and not rely on a second income in the event of a job loss. Living below your means is the best way to prepare for the unexpected.

10. Consider finding a recession-proof job if you are in the job market

Another way to prepare for a recession as an employee is to consider recession-proof jobs. Healthcare workers, teachers, and pharmacists are types of jobs in demand even during a recession.

If you aren’t looking for a job, it’s still important to be prepared. Expanding your skills is excellent for job security, especially when it comes to wages and working remotely.

Make sure to add any new skills to your resume to stay prepared in case someone is hiring for a job you’re interested in. 

Another idea for jobs is remote work. Companies are shifting towards remote positions now more than ever. Since the best work from home jobs are on the rise, you might consider applying for some or starting a home-based business.

While not every remote job is a good choice during a recession, it is helpful to have it as an option.

Expert tip

Recessions are going to happen, so it’s important to always know how to prepare for a recession. In my opinion, the best bet is to take the approach of being over prepared.

Try doing several things to improve your financial situation, such as budgeting, saving money, and looking for a new job or side hustle. The more you prepare, the better you will feel and the more your finances will improve.

How much money do you need to survive a recession?

The amount of money you need to survive a recession depends a lot on your savings and expenses, but a good place to start is by setting aside emergency cash.

You should try to have 3 to 12 months of your core expenses saved to prepare for a recession, and you can always have more than this if you think it’s necessary and for peace of mind.

In addition, having multiple income sources from several jobs or side hustles diversifies your income and can help you in a recession. With many income sources, your finances are less likely to take a big hit, even during a recession.

What should I buy in a recession?

You should buy things in a recession that are likely to be cheaper and make the most sense financially for example your core essentials. It’s a good time to invest, especially in stocks and potentially real estate.

Make the investments that you can afford after you pay your bills, of course.

Beyond investing, what you buy during a recession really depends on your goals and financial obligations. If you have savings and are doing well financially during a recession, you may be able to spend as normal.

Make sure you know how to spend money wisely before making unnecessary purchases.

What happens to money you have in the bank during a recession?

The money you have in the bank during a recession is generally still quite safe. Just be sure that your bank is FDIC insured (which will cover amounts up to $250,000 for each depositor), and you don’t need to worry about losing your money.

However, the interest rates for your accounts may drop, so this is something to be prepared for.

There is generally no reason to remove your money from the bank during a recession, and it’s unwise to panic and take out your investments, as well.

The best thing to do during a recession is to wait it out, knowing that the economy will return to normal and your money will still be in the bank. The stock market also does well generally over time, so leaving your investments alone is a good idea.

How much money should you hold in a recession?

The amount of money you should hold in a recession in cash is whatever amount you have for your emergency fund. 3 to 6 months of savings is the commonly accepted amount, and it will likely be enough to help you get through difficult times during a recession.

If you want to keep more cash than this, you can, of course. Even up to a 12-month emergency fund is a smart idea.

But beyond that, it is pretty safe to have your money invested in most cases. You don’t want to miss out on interest, after all!

How can you make money in a recession?

Knowing how to make money in a recession is all about looking for opportunities. Find a job that is likely to stick around during a recession e.g. a recession-proof job, start a side hustle, invest money, and look for ways to earn that isn’t affected by the recession.

Also, consider careers and money-making opportunities that thrive in a recession, like healthcare, grocery stores, etc.

In addition to this, continue to make money as usual by not quitting your day job, if possible. One of the best ideas for maximum financial security during a recession is to have a full-time job and a side hustle. The more hours you can work, the more prepared you are and the more financial wellness you have.

Articles related to preparing for a recession

If you enjoyed this article about preparing for a recession, you’ll like these other reads!

• 19 Best Recession-Proof Jobs For All Skill Levels
• Should I Buy A House Now Or Wait?
• 14 Best Recession-Proof Businesses Ideas You Can Try!
• What Is an All Weather Portfolio? Is it Right for You?

Start leveraging these tips on how to prepare for a recession today!

While we can’t predict when a recession will happen, it makes sense to always be prepared for major life events. Apply these tips for how to prepare for a recession properly and make good financial decisions.

That way, you aren’t taken off guard financially, and you will have everything in place to prevent financial disaster. Trying out extreme frugal living, bulking up your savings, and creating multiple streams of income will help secure your financial wellbeing.

The post How To Prepare For A Recession: 10 Must-Do Steps appeared first on Clever Girl Finance.

The post 5 Causes Of Financial Problems And What To Do appeared first on Clever Girl Finance.

The post How To Navigate Family Financial Problems appeared first on Clever Girl Finance.

The post How To Rebuild Your Life After A Financial Downturn appeared first on Clever Girl Finance.

The post How to Deal With Long Term Unemployment appeared first on Clever Girl Finance.

The post 7 Essential Tips To Get Through Financial Hardship appeared first on Clever Girl Finance.

The post Tired Of Being Broke? 7 Steps To Change Your Situation! appeared first on Clever Girl Finance.

The post How To Stop Being Poor: Breaking The Cycle Of Poverty appeared first on Clever Girl Finance.