How Can You Save When the Economy is Slow?
When the economy is slow, it's important to understand where you can save. Here are our tips.
When economic conditions suddenly slow down, the first things you likely think about is how to save and redirect your investments. The uncertainty can be overwhelming in the moment, but it's important to be strategic with how you save— and how you spend — during these times.
Here are some tips for how you can be financially savvy when the economy is slow:
Readjust your budget
It's always a good idea to have a budget, but when economic conditions change, it's time to reevaluate your spending. Perhaps your daily routine has changed, and instead of commuting into work you are now operating remotely. In this instance, the money spent on transportation, your morning coffee or lunch can be saved or redirected toward new expenses (like an increased utility bill).
Sitting down and taking a hard look at your budget is the first thing to do when your finances or markets change. Making small and practical changes to your spending right away help ensure you can continue to save.
Readjust your budget when the economy changes.
Pay down your debts
With your new budget squared away, it's time to evaluate your existing debts. According to Dave Ramsey, when the economy is going through a rough patch it's just as important to reduce your debt as it is to save. While this may sound contradictory, paying off loans bills is setting you up for a better future so if the economy takes a while to recover, you have less debt to worry about.
With the money you saved from not commuting, pay down some of your debt and improve your credit score and financial stability for the long run.
Cut down on going out
On the topic of reducing costs and debt, one the most impactful ways to save money is to make some changes to your lifestyle. Luckily, the current climate makes that easy. Instead of eating out, traveling daily and paying for new entertainment, take advantage of what you already have at home and stay in.
While going out for a meal or movie is fun, doing activities like this every day adds up between the little costs, like gas, to larger expenses like food. Reducing how often you go out can easily save you some money every week that you can put back into reducing your debts or saving for an emergency fund.
Diversify your income and investments
Finally, in times of economic uncertainty, it's important to diversify your investments and/or your income. The Balance explained that you shouldn't keep all your eggs in one basket during stable economic conditions, but in these times, it's even more important to diversify your investments across different assets and industries.
The same is true for your source of income. Perhaps it's time to take up a side gig to supplement for having your working hours reduced or invest in a rental property to add an extra source of revenue to your portfolio.
If you have more questions about how you can continue to save when the economy is slow, contact your local Vectra Bank Representative today.
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