4 tips to stay money-savvy in an uncertain economy

With inflation on the rise all over the world, and with food, gas and energy prices hitting record highs, if you don’t have your finances in order, now’s the time to do it. 

The COVID-19 pandemic is still around us and economic uncertainty looms heavier than ever. Long derided, preppers’ stockpiling efforts are now seen as a good idea. But while having enough toilet paper, food and sanitary products is great, how much money do you have saved in case of emergencies?

According to a report by LendingClub, in 2022, 64% of Americans are living paycheck to paycheck. And when you consider that some of the biggest causes of homelessness are caused by poverty, unemployment, and financial difficulties, if you lose your job, you risk losing everything. Getting on top of your money will help you stay safe – and go to bed without worries. 

So we’ve put together 4 tips to help you build your financial resilience and stay money-savvy in an uncertain economy.

1. Build an emergency fund

If your savings account is looking barren, it’s time to buckle down and save. Scott Pape, writer of the bestselling book “The Barefoot Investor,” calls it safety money. His advice is to create a separate bank account (with a good interest rate) where you initially deposit a minimum of $2000. The idea behind this is that that’s your emergency fund, separate from all the other savings accounts (you don’t touch this money unless it’s essential).  

His advice on getting the initial $2000? Research side hustle opportunities, even if it’s a short-term casual job that helps you build your initial savings. Another tip is to literally look around your home and see what you can sell on Craigslist and eBay. 

Sounds like penny-pinching, but once you do this you’ll not only have an emergency fund at the ready, but also the sense of accomplishment that you can do this!

2. Reduce debt

When you’re trying to save as much money as you can, prioritizing paying off your debt can feel counterproductive. But having debt slows down your saving efforts, and can even impair your future goals. Renee Minchin, Founder & CFO of 2account says “when trying to save and increase your financial safety, the worst thing is to realize that you forgot to pay your credit card bill and now your score is affected.”

A good strategy to avoid this from happening is to consolidate your debts. This has a few advantages:

• With everything in one place, you can automate your payments to make sure you don’t miss out on anything
• Combining multiple debts into one loan also not only reduces the number of payments, but also reduces the interest rates – consider this excess money and automatically transfer it into a savings account!
• Your credit score will be improved because you won’t have to worry about late or missing payments

When faced with credit card debt, it can feel like there’s no way out – and sometimes it can be hard to get those scissors out and literally cut it out of your life. 

3. See where you can cut expenses

The third step towards your financial independence is to review your budget and figure out where you can make cuts. 

As a rule of thumb, you should divide your money 50/30/20. 50% goes to expenses, 30% goes wherever and 20% goes to savings. Credit for this rule goes to Senator Elizabeth Warren, former bankruptcy professor. 

If you’re not putting away 20% already, where can you reduce your spending so you can reach that? By figuring out where your money is going, you’ll realize where you can make changes. 

Depending on your situation, you might want to consider different measures. For instance, if you can, consider taking public transportation and riding a bike instead of using your car. Make a solid meal plan and batch cook to save both time and money. 

4. Communicate with your family

If you’re living with your partner, family and/or have kids, it’s important to acknowledge that you’re all in this together. 

Have the hard conversations with your family about your financial situation, and make a savings plan together. If you are in charge of the finances, it’s essential to be transparent and also share details about accessing the accounts. 

If you have children, make sure you have a life insurance policy. It’s an extra expense, sure, but it’s a vital step for the safety of your family. Plus, it might be cheaper than you think. Check with a few insurance companies to see what they offer. 

Conclusion

While the world of finance might seem overwhelming and daunting at times, it’s a crucial part of your life, safety and wellbeing. These 4 money-savvy tips will help you build your financial resilience in an uncertain economy.