The global economy is still recovering from the pandemic and Russia’s invasion of Ukraine, creating uncertainty in many corners of the world. The rapidly rising inflation rate in the United States and major European countries negatively influences global financial conditions. American policymakers, investors, and business executives have been debating whether the U.S. economy will tumble into recession in the next two years.
With the ongoing uncertainty about the financial future of economies worldwide, households in the U.S. are suffering from the consequences. A recent survey found that price increases are causing financial hardship for U.S. households, with 12 percent describing their hardship as severe. This means that the inflation can affect their ability to maintain their current standard of living. So, how can U.S. households survive this economic slump?
Prepare for the Worst
An economic downturn is inevitable sometimes, and the best way to handle it is by preparing for it before it occurs. During tough times, it’s normal to feel anxious about your career, cash flow, and lifestyle, mainly because a recession primarily affects employment and production. In a recession, countrywide household and business spending are restricted for two or more quarters of the year, and these changes can last for a few months or years.
Consider preparing yourself financially and mentally to get ahead of financial emergencies. You can do this by revising investments, managing debt, and building savings. Some practical ways to prepare for the worst are trimming expenses, building an emergency fund, and ensuring employability, which will be discussed below.
Trim Down Expenses
The sooner you explore your household budget to cut down expenses, the better control you will gain over your finances. If the rising inflation rate affects your affordability, consider developing a budget and spending plan to trim expenses.
Begin by visiting your expenses and identifying the essential ones, such as utility bills, groceries, or insurance payments. Once you’ve separated essentials from leisure, think about eliminating expenses that don’t serve you. For instance, if you have subscriptions to numerous streaming platforms or a gym, it might be helpful to keep the one you use most or share a subscription with your family members and split the cost.
Build an Emergency Fund
Amid inflation, finding extra money for an emergency fund can be more challenging and daunting. But there are a few you can build an emergency fund or add money to an existing one. To start building your emergency fund, put aside a specific amount of your income every month, whenever possible. However, this can be challenging given the rising cost of products and services that may leave many households with limited disposable income.
If you’re struggling to arrange money to contribute to the emergency fund, consider taking a short-term installment loan when you need quick cash. One of your best options is FlexMoney, a Missouri-based licensed online lender that offers fast funding for up to $2,000 for terms of 12 months. Visit their website at Flexmoney.com to explore your borrowing options. The simple application process and quick approval allow you to access cash when needed. Knowing that you can get emergency funds when you need them can relieve stress and help you survive this economic downturn.
Keeping your spirits high in the current economic state isn’t easy. If you’re struggling to handle the rising costs, you’re not alone. Use this guide to help yourself and face the challenges head-on!