There’s good news and bad news when preparing for an uncertain economy.
The bad news? Most of the economy’s health, like inflation rates or job creation, are out of our individual control. The good news though is that we do have control and say over how we can prepare ourselves for any economic uncertainty, especially when it comes to our personal finances.
The foundation of this preparation is building a strong emergency fund. This includes aiming to save enough to cover at least three to six months of essential living expenses.
While saving cash at home in a safe and secure place is always an option, securing those funds in a savings account or short-term Certificate of Deposit (CD) at a community bank is an option that allows you to earn interest. If that community bank happens to be Saco & Biddeford Savings Bank, you’ll be supporting the Maine community while also earning interest (it’s a win-win!).
Building that financial cushion may bring changes and challenges to your current financial habits, but now is the time to control spending and build savings. A savings fund will take time to build but even contributing a little bit each month can make a big difference. Start by creating and refining your budget, review expenses and prioritize needs from wants. If possible, work on paying off your debts, as well.
Prioritizing high-interest debt, such as credit card balances or private student loans, helps keep your debt under control until it can be paid off. You might also consider consolidating debt into a personal loan with a more favorable interest rate or directing extra funds into a savings account to earn interest.
Taking a proactive approach can help ensure potential difficulties down the road are met with financial confidence. The economy may shift and present unexpected challenges, but with the right habits and a savings-conscious mindset, you can be better prepared to expect the unexpected.
