During times of economic uncertainty, people tend to panic about the hit the shock could take on their finances. If you are feeling uneasy about the status of your future finances, these tips can help you decide what to do next.
Manage Your Credit Availability and Credit Score
Credit is a great thing to have, especially when hard economic times hit. Try to keep your credit lines free or establish new ones so that you have credit to use if you need it. Pay down credit line debt as fast as possible and don’t use them to purchase unnecessary things until the uncertainty has passed. Some credit cards may allow you to request credit line increases, which will give you more wiggle room if you need it without having to apply for new credit card accounts or other loans.
Establish a Financial Safety Net
If you haven’t already started, begin saving an emergency fund. It is ideal to have three to six months’ worth of living expenses saved up for emergencies and times of economic hardships. Think about how much you owe on loans and other payments each month to decide the amount you need to save. Try to reduce discretionary spending to help save faster.
Refinance or Consolidate Your Debt
If you have high interest rate debt, times of economic uncertainty can have some of the lowest interest rates to refinance or consolidate debt into. Look at your current debt and the interest rates on each loan to determine if refinancing will be worth it. Try to only refinance the largest and highest interest rate loans. If you open too many new credit accounts at the same time, it will take a hit on your credit score. Consolidating multiple loans into one new loan with a lower interest rate is also a great option to save money on monthly payments and help you pay down debt faster.
Use Unused Gift Cards or Credit Card Rewards
We often forget about gift cards that we received from friends or family during the holidays that we have not yet used. In hard or uncertain economic times, a gift card can be that extra meal that you may not have otherwise. According to Bankrate, about half of all adults in the US have unused gift cards, so now is a great time to see if you could be one of them.
Credit card rewards can also be very helpful for extra purchases during hard times. Using these rewards to purchase gift cards or get cash back is an easy way to build up savings for emergencies.
Good financial planning is necessary no matter what the circumstances. The earlier you can start planning ahead for hard times, the better off you will be if difficulties hit. Hard ships are temporary, but great financial habits can help keep you safe and secure for a lifetime.