Often the focus of your finances is on what you can be doing to make them grow, make them stronger and make them work harder for you. However, in a recession, you also need to be aware of the external forces which can affect your financial stability and which are out of your control. Knowing that interest rates will be fluctuating, job security will be fragile and credit will be hard to get can help you manage your finances and make changes which are within your control, to survive.
To manage your finances in a recession you need these tips:
* Clear high interest debts. In a recession your high interest debts should be your highest priority and you should focus on paying them off as soon as you can. Your high interest debts are taking a big chunk of your budget each and every month and if money became tighter or if you lost your job, you would struggle to meet those high interest payments.
* Over pay your mortgage. The last thing you want to have to do in a recession is sell your house, firstly because you want to maintain some stability for your family, and secondly because house prices plummet in a recession and you won’t get anywhere near the true value of your home. Therefore, protect your most important asset by making over payments into your mortgage. You can set up a direct debit of a higher amount each month, or you can simply deposit extra amounts into your account as they come in from cash birthday gifts or a tax refund for example. Getting ahead on your mortgage also gives you room in case you can’t meet your repayments for a few months.
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