With the impact of coronavirus on the economy, some financial experts say the country could be facing the first recession in more than a decade. But there are steps you can take to help get your finances ready for a potential recession.
One of the first steps you can take is reducing your expenses. Cutting things like subscription services and gym memberships could make an impact. But experts also say examine your "fixed" expenses like your home and car insurance to make an even bigger impact long term.
Liz Weston, with the personal finance website Nerdwallet, suggests refinancing your home, increasing the deductible on your car insurance or getting a roommate.
"Those things are a big chunk of your budget," said Weston. "So you actually get more mileage out of cutting one of those than you would your Netflix subscription."
Weston also said it's important to have "financial flexibility", meaning having access to both cash and credit funds. Emergency funds are important but there is a catch.
"It can take a long time to build up an emergency fund," Weston said. "In the meantime, having access to credit can really be a life saver."
When cash runs low, credit cards can help keep you afloat according to Weston. That's why it's also important to protect your credit so your credit lines don't dry up. But Weston said to make sure you pay your minimum monthly on time and don't apply for too many credit cards.
Also if you enter a hardship or forbearance program, know exactly how your lender will report it to the credit bureaus.
"That is key. You want them to report it as either 'paid as agreed' pr to put a disaster code," said Weston. "There's actually a special code for people affected by a disaster, that prevents these programs from hurting your credit."
Finally, Weston suggests you update your investments at least once a year. If you have years until retirement, she advises that you don't liquidate anything.
