We all know the feeling: You wake up one day and realize everything has changed. The economy is in a recession, and your job is on the line. Suddenly, all of those things you used to take for granted – your income, your lifestyle, your very way of life – are at risk. It’s a scary time. But don’t panic. There are some things you can do to weather the storm and come out the other side unscathed. Buying the right investments mentioned at stonybrook can help. There are also some things you should absolutely avoid doing if you want to make it through this tough time in one piece. Read on to find out.
Stopping Your Retirement Contributions
Things may hit hard financially during a recession, but now is not the time to stop contributing to your retirement accounts. It can be tempting to put that money towards everyday expenses instead, but doing so will cost you in the long run. You miss out on potential returns from investments, and if you’re saving for retirement through an employer-sponsored plan like a 401k or 403b, you could also miss out on potential matching contributions that your employer might offer. In fact, if you’re able to put a little extra towards retirement during a recession, you may even be able to reap bigger rewards once the market recovers.
Taking on More Debt
It seems counterintuitive to take on more debt when you’re already struggling financially – yet many people do during a recession. Taking on more loans or credit card debt can temporarily alleviate some of your financial burdens, but it will also just add to it in the long run. This is especially true if you’re dealing with high-interest debt, like payday loans or credit cards. It’s best to stay away from this type of debt during a recession – and any time, really. With or without a recession, the last thing you want to do is rack up more debt.
Making Unnecessary Purchases
A recession can be tough on your finances, but that doesn’t mean you should go on a spending spree to make yourself feel better. Making unnecessary purchases – even if they’re relatively small – can add up quickly and put you at risk of going into more debt. Stick to your budget and only purchase items that are absolutely necessary for the time being. Note that living beyond your means is never a good idea, but it’s especially dangerous during tough economic times.
Becoming a Co-signer
A lot of people look for ways to help out friends and family during a recession. It’s admirable, but you must be careful about how you do it. Becoming a co-signer on someone else’s loan or credit card is one surefire way to fall into a financial hell. Not only does this put your own credit score at risk, but if the other person fails to make payments, you could be held responsible for the debts. It’s better to offer support in other ways during this trying time. Navigating a recession can be tough, but it’s possible to get through it with minimal damage if you make smart decisions.
Avoiding the things mentioned above – like taking on more debt or becoming a co-signer – can help keep your finances healthy and secure during this trying time. It’s also important to stay informed and aware of the markets so that you can make decisions that are right for your situation. Taking proactive steps can ensure that you come out of this recession in one piece.
