5 Ways to Save in a Down Economy

In the months since Illinois and other states issued stay-at-home orders to mitigate the spread of Coronavirus (COVID-19), economic turmoil has spooked Wall Street and Main Street alike. No one saw the resulting impact coming, but there are ways to cope and even thrive financially in a less-than-ideal economic environment. In this article, we’ll highlight five simple ways you can boost your savings and make other smart money moves. If you have questions about your own situation, call or visit one of our 12 branches.

1. Grow your emergency fund.

It has long been a standard financial guidance to save three to six months of living expenses for a personal emergency fund. If you’re nowhere near that goal, start with a smaller sum in mind. Even $1,000 can help you weather an unexpected bill or the wait for unemployment benefits to kick in. Having an emergency fund makes life less stressful, especially if you’re temporarily unemployed during a bad economy. An easy way to get started is to set up a small automatic transfer from checking or direct deposit a small portion of your paycheck to your savings account. And it’s wise to keep your emergency fund, and other savings that are not for long-term investments, safe and secure in an FDIC-insured bank deposit account.

Your emergency fund will also save you from using credit cards or other debt as a safety net. Once you dig yourself into a steep hole with debt, it’s hard to get out. We have solutions. Check out our personal savings accounts options today!

2. Make a budget you can stick to.

Many people think of a budget as a straitjacket, limiting what they can do. Instead, think of your budget as a roadmap that puts you in the driver’s seat of your own finances. You work hard for your money; some of it should be yours to keep. If you want to save more, you have to plan for it.

Budgeting can be as simple as using a basic spreadsheet or pen and paper to firsthand see your current finances and expenses. If you want to get fancier, there are a variety of budgeting software and app programs you can try. It may also help to reflect on your current spending habits by answering these questions in the Japanese-based kakeibo method.

3. Pay down debt.

Now that you have your budget under control, you can make decisions about saving and paying down debt that will set you up for a stronger financial future. If you have a lot of debt, or high-interest credit card debt in particular, it may be better to focus on paying that off first, once you’ve established a basic emergency fund. It is easy to set up an automatic payment so you don’t have to think about it. Paying your debt off as quickly as possible will save you money in interest and free up space in your budget for even more aggressive saving once your debt is under control.

4. Find a side hustle.

If you can’t find enough money in your budget to ramp up your savings and/or debt payoff efforts, you may want to look for a part-time gig to bring in extra money. Luckily, this doesn’t have to mean a second job at a store or restaurant. You can advertise your skills online and decide how much you want to work. For example:

• Good with kids? Pick up babysitting jobs on Care.com and/or sign up to be a substitute teacher at a local nursery school.
• Crafty? Make candles, soap, t-shirts, or whatever you’re interested in and sell your wares on sites like Etsy, Amazon Marketplace, etc.
• Handy? Handyman (or woman) skills are always in demand. Advertise through local community groups like Nextdoor and help your neighbors with the odd jobs they can’t do themselves.
• Have other skills? Whatever you’re good at, chances are you can turn it into a side hustle. From providing remote personal assistance services to looking for freelance writing or design gigs, you can find a way to make extra money that fits your skillset and schedule.

5. Stay the course with your investment account(s).

When economic times get tough, it can be tempting to pull money out of the stock market or hit pause on automatic contributions. However, saving for retirement through the stock market is a long game, and even when the market falls, you can buy stocks/bonds at a lower price and realize gains in time. That’s why it’s best not to make any sudden changes. If you make a regular contribution to an employer-sponsored retirement account, keep it up. Instead of trying to beat the market, you can find peace in knowing that a recurring contribution will even out “buying low” vs. “buying high.” Need more personalized advice about your portfolio? Contact our Trust and Investments team today.

Town and Country Bank and Peoples Prosperity Bank are here for you!

We are committed to assisting our customers during the COVID-19 pandemic and the economic challenges that come with it. Stay informed with our Coronavirus (COVID-19) Updates and Financial Relief Resources page. Downturn economies come and go, but your local bank is here for you. Contact us to discuss your current financial concerns and learn about the solutions we offer.

Having a healthy emergency fund, learning how to adapt to a more frugal lifestyle, and diversifying your sources of revenue are just a few money saving tips that can help you survive a recession. A recession is something beyond our control, but what we can control is how we prepare for tough financial times. Taking precautionary measures now to safeguard your finances in the future can make a world of difference.