I’ve received so many DMs this week on Instagram about what to do if we head into a Recession that I jumped on Live to address it. You can watch that replay here (it’s about 16 minutes), but the general just is this – the scary part of a Recession is job loss.
If you’re like me and remember the Great Recession, you or someone you love probably experienced a job loss in that time. My husband and I got engaged and found out two weeks later at his company’s Christmas party that he didn’t have a job anymore. 😬 I was on that chopping block a few times with layoffs at the company I worked for.
It’s scary going through a job loss and Recession so obviously, I’m hoping we don’t go through another big Recession, but I also know that we can’t keep our heads in the sand. We have to prepare in case it does happen. And the best way to make sure you’re financially prepared to navigate a job loss?
Your fully-funded Emergency Fund.
Yep. That six months’ worth of living expenses you have saved up (I go through all the details of why I believe in a six-month’s Emergency Fund and how to build one up in my book, Getting Good with Money). That’s your best protection against a potential layoff.
Now, I know you may not have a full six-month’s worth saved up, but I want to encourage you to make that a priority now. Even if you’re in the middle of attacking consumer debt aggressively, I want to encourage you to temporarily pause attacking that debt and instead focus on beefing up that Starter Emergency Fund.
Here’s the thing, in a Recession, you can always call your creditors in the event that you do lose your job and let them know that you’ve lost your job and need to suspend payment. Granted not every creditor will work with you and some may still charge you interest but if you’re really in a tight spot with a job loss it never hurts to ask.
But if you don’t have that fully-funded Emergency Fund, I don’t want you to panic. I want you to get motivated to build up that Ark – because, yes, it’s your own personal Ark (just like Noah’s!) meant to protect you and your family in the midst of a storm. (If you want more on this check out Chapter 12 of my book and listen to the recording on Instagram).
Here are some ways to start building or beefing up that Emergency Fund TODAY:
1. Ransack your house.
Sell off anything and everything you don’t need right now. If you haven’t used it in years and it’s not something you can reasonably expect to use again in the next several years, sell it. Got more than one artificial Christmas tree but you moved this year, and only one Christmas tree will actually fit in this new house? Sell the others! Get ruthless and sell off anything you don’t truly need right now.
2. Unclaimed Money.
If you haven’t done this, head here and then head to your State’s specific website for unclaimed funds. Check every city/county/state you’ve ever lived in and check every name you’ve ever used. You might be surprised! We did this and got $68 mailed to us, which was unclaimed money from my husband from several years ago. Easiest $68 I’ve ever made, and it went straight to our Emergency Fund. I know that may not seem like a lot of money but it was money that didn’t have to come out of our household budget. Every little bit helps.
3. Skip the fancy Christmas this year.
It’s okay to not have a big fancy Christmas this year to focus more funds on your Emergency Fund. Seriously. Whether you suffer from a job loss or not, you don’t need to feel bad if this Christmas can’t be as big and fancy as in other years. Just focus on cultivating joy, and I promise your kids won’t remember what they didn’t get for Christmas.
4. Check your withholding.
Are you withholding too much money from your paycheck? (If you get a big refund every year then chances are you are withholding more money than you need to) If so, you can change your withholding so you can keep more of the money you earn every paycheck. Head here to the IRS website to use their calculator to see what withholding you should be claiming.
5. Cut your expenses to bare bones.
If you’re really concerned about losing your job in a Recession and you don’t have enough saved in your Emergency Fund. The best advice is to drastically cut your expenses now to the bare minimum in order to create enough margin to aggressively save up your Emergency Fund.
Here are a few ways to cut your expenses quickly:
- Switch cell providers (I use Mint Mobile and love it! They have plans starting at $15. I’ve never once lost service, even when staying in the mountains earlier this year!)
- Cut all streaming services you hardly ever watch, and consider cutting regular cable/satellite if you don’t regularly watch it.
- Call around and get new quotes for insurance and utility providers. Yes, I know this isn’t fun to do, but it can literally save you hundreds of dollars in a year just by spending 20 minutes on the phone.
- Cut the gym membership.
- Cut out all boxed subscription services (KiwiCo., Fabletics, Ipsy, etc.)
- Check all of your re-occurring subscriptions that you may have forgotten about and decide which ones to keep and which ones to go (think Amazon Prime).
These are just a few of the ways you can find/earn extra money to start beefing up your Emergency Fund this week. I don’t know if a Recession is coming, and I certainly don’t want to add to the doom and gloom spiral, but I know that it does none of us any good if we aren’t prepared for it just in case.
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