How to get on top of your finances before a recession hits

Rising food prices and astronomical fuel costs are eating into people’s budgets, making it more and more difficult to get to the next payday without racking up more debt. With salaries so stretched, the idea of savings and investments is a luxury many cannot achieve during these tough economic times.  And as if that’s not enough, there’s all this talk about an impending recession!

To help you take control of these stressful finances, African Bank have shared some tips on how to recession-proof your finances, right now: 

1. Be realistic about your finances: Live within your means. Understanding what you can and can’t afford and sticking to it will allow you to be better equipped to face a rise in the cost of living and have money to save. If you already budget, well done! The trick now is to tighten that budget accordingly and prioritise your savings.
2. Know your credit score: A healthy credit score can stand you in good stead when times are tough and help you get a better deal on credit and loans in the future. To maintain a good credit record, pay your creditors on time and don’t miss payments. If you are struggling, talk to your creditors about a temporary lower repayment amount.
3. Have a piggy bank for emergencies: Money earning interest in a savings or investment account that you can access in a crisis is invaluable. It means less reliance on credit in an emergency. If you use money from this fund, always be sure to replenish it as soon as possible.
4. Make saving and investing a priority: The benefit of saving and investing is that it allows you to stay ahead of inflation and increase the value of your money. Do some research to find the best investment rates that will help to grow your wealth. Start small and build up your investment or savings over time. The crucial first step, however, is to start.
5. Have a side hustle: An extra income stream is a great buffer and lifeline. Many thriving side hustles were born during Covid-19. Now is a good opportunity to turn a hobby or talent into extra money.
6. Learn and talk about money: You should always be clear about interest rates and, if you have investment accounts, find out how they are performing. Keep an eye on bank charges that eat into your available income. Every cent counts, so make sure you are getting value for money from your bank. Be an active part of conversations about money at home, regardless of your marital status. It is easier to achieve financial goals when everyone is pulling in the same direction. Get the kids involved too. Open a bank account for them and teach them how to track their money and spending from a young age.