Unless you\u2019re an economist, you might think that the global or national economy doesn\u2019t really have a whole lot to do with your daily life. It might not even be something you consider, unless the economy really starts to slow down.<\/p>\n
The truth is, the economy impacts practically every facet of our lives. How and where we make a living, how we spend our money, what things cost and how we save are all intricately intertwined. When Americans spend less money, the overall economy shrinks. As the White House points out, consumer spending actually accounts for a whopping 68 percent of our nation\u2019s GDP<\/a>.<\/p>\n What does a slow economy mean for you? You might need to adjust your financial approach<\/a> to weather the storm, spend less money and put away more of it for the future. Read on to learn about seven strategies to protect your bottom line in a slow economy.<\/p>\n \u00a0<\/strong><\/p>\n Higher unemployment levels, wage stagnation and job instability are all common effects of a slow economy. It\u2019s never easy to lose a job, but an emergency fund<\/a> with 3 to 6 months\u2019 living expenses can help get you by until your next position.<\/p>\n If possible, tighten your budget<\/a> to reduce or eliminate some unnecessary expenses, like eating out, monthly memberships or impulse purchases. You should also consider holding off on any larger purchases if your income is at all volatile in a slow economy.<\/p>\n While you may not be able to save as much, you should always continue to put some money away, even if it\u2019s just $20 per paycheck. It\u2019s also important to live within your means<\/a> and aim to maintain your current lifestyle even if your income increases<\/em>. Saving the additional increase can help you build your emergency fund much faster.<\/p>\n \u00a0<\/strong><\/p>\n You should always keep an eye on your accounts to avoid more financial trouble, like overdrafts<\/a>, personal credit issues<\/a> or credit report errors<\/a>, that can complicate an already stressful situation. Make a habit of reviewing your checking, credit and any other financial account daily or weekly so you always know how much you have. Budgeting, banking or other financial planning apps can do a lot of the work for you.<\/p>\n If your bank doesn\u2019t offer a feature-rich smartphone app, third-party software like Mint or Personal Capital are free options that can help you manage your money from afar.<\/p>\n <\/p>\n A slow economy may also limit employment opportunities; it\u2019s better not to jump positions unless you\u2019re in a very high-demand field or have something already lined up. Instead of looking for another position, try to sharpen your career-related skills to stay job-ready. Check out job postings for similar positions to yours; do you have the job-related knowledge you need to find work elsewhere? Remember to keep your resume up-to-date and look for any opportunities to sharpen your career skills or make yourself a more competitive candidate.<\/p>\n <\/p>\n Getting a roommate or smaller home may help you reduce your recurring living expenses significantly. With a smaller budget, you\u2019ll have more room to take on income fluctuations and\/or build up your emergency fund. If you live alone, there are other strategies and tips to cut recurring expenses, like meal planning, getting rid of cable and walking to work.<\/p>\n <\/p>\n Protecting your credit is as important in a slow economy as it is when business is booming! Your credit score consists of a few metrics, but your payment history has the biggest impact on your score<\/a>. If you can\u2019t keep up with your payments, you may be able to work with your creditors for a deferment or other payment arrangement. However, the worst thing you could do is nothing. Even small payments, like the minimum amount due, can help keep your head above water. While it may not help you aggressively pay off debt, it can help you maintain or improve your credit score.<\/p>\n \u00a0<\/strong><\/p>\n If you need to borrow money, you might feel like your retirement savings budget can be better spent elsewhere, but it\u2019s unlikely that a retirement account withdrawal is your best source for emergency cash. In general, an early withdrawal from an IRA retirement account may be included in your gross income, in addition to the 10 percent tax penalty.1<\/sup><\/p>\n If you\u2019re concerned about the value of a retirement account, it\u2019s important not to panic, as the value may just as easily recover as the economy stabilizes. You\u2019d only lose money if you sold an investment or withdrew your money at a loss. For those with a longer time until retirement age, a slight fluctuation in value has even more time to rebound and potentially increase.<\/p>\n <\/p>\n If you\u2019ve paid off all your debts, have a solid retirement savings plan and still have extra money to spare, it may be a good time to pursue reliable long-term investments<\/a>. However, certain investment products like stocks do not provide any guarantee, so the value may decrease and cause you to lose money.<\/p>\n While some investments are inherently risky, you can pursue long-term, reputable products that are expected to steadily grow. Certificates of deposit, high-interest savings accounts, treasury notes and mutual funds are some examples of low- to moderate-risk investments for beginners. No matter how you decide to invest, it\u2019s a good idea to spread out your investment so that all your money isn\u2019t invested in just one account, method or company. Diversification of your investments can help you mitigate the risk of a financial loss. It may also help to speak with an affordable, fee-based financial advisor to explore the best options for your budget.<\/p>\n <\/p>\n References<\/p>\n1. Build Up Your Emergency Fund<\/strong><\/h2>\n
2. Keep Tabs on Your Money<\/strong><\/h2>\n
3. Pursue Career-Related Education<\/strong><\/h2>\n
4. Lower Your Living Expenses<\/strong><\/h2>\n
5. Stay Up-to-Date on Payments<\/strong><\/h2>\n
6. Don\u2019t Touch Your Retirement Account<\/strong><\/h2>\n
7. Consider Low-Risk Investment Strategies<\/strong><\/h2>\n