How to prepare your savings and your domestic economy in a recession scenario

It is no secret that we are currently living in uncertain times economically and this is beginning to be noticed in the domestic sphere. Various factors have caused high inflation that affects various sectors, many of them end up translating into price increases in daily purchases and other essential goods and services for most families.

This inflation causes us to lose purchasing power since it is eating up a percentage of the household budget and some families cannot make it to the end of the month.

Many economists predict that we are headed for a recession so it is important that, although I always recommend keeping track of our finances, given this forecast, we are more rigorous than ever.

I share some tips on how to save money and make our household more resilient in a recession scenario:

numbers on paper

Make a budget and stick to it. This is crucial in any economic situation, but especially important in a recession. It will allow us to know what we can afford and, consequently, we will avoid getting into debt on purchases that may not be so necessary at the moment. In addition, they carry added costs such as interest and commissions.

If we don’t put the numbers on paper (or in a spreadsheet), it’s very easy to make the mistake of buying without thinking that it wasn’t so necessary and we couldn’t afford it right now. In this way we can plan the purchase for later, when we have the money saved.

The unnecessary, out. To the rest, take out the scissors

Track your income and expenses so you know where your money is going and make any necessary adjustments. Recording each euro that comes out of our pocket allows us to detect ant expenses that our economy is supporting.

Right now you have to look at them with a magnifying glass, not because of their size, but because no matter how little they are, they remain, and it is something that we should now avoid. The ant expenses are those of low amount but that, if we make them frequently or have many of these, at the end of the month they rise a good peak. We usually surprise ourselves doing this exercise, they go up much more than we imagined.

To the rest of the expenses that we maintain, after reviewing well and eliminating all the unnecessary ones, it is time to give them a snip. That is, try to find free or cheaper options.

People circulate with their cars inside a supermarket, with posters announcing the offers. EUROPA PRESS

Comparators, white brands, outlets, second hand…

For this we can use price comparators, white brands, sales, outlets, second hand…

We will precisely find ways to save on frequent purchases such as those at the supermarket by making use of some of these resources. If we also add promotions such as those that offer a free product through the “try it for free” modality with which we are reimbursed for all (or almost) what we paid or we acquire discounted products by 30, 50 or 70% due to expiration date, offers, we take advantage of loyalty clubs, in addition to coupons , we can end up saving up to €150 a month in the shopping basket by making slight changes to the weekly menu, adapting to these offers. 150 euros a month is 1800 euros a year, in just one category of expenses. It all adds up, and not a little.

Emergency fund, the cushion of peace of mind

With what we save from having cut expenses, it is convenient to create an emergency fund. The ideal is to program an automatic transfer so that, as soon as we collect, a % that we have decided for savings is set aside.

This “pre-saving”, that is, paying us before other providers such as the electricity company, gas…, will be accumulated in an account destined to build the mattress of tranquility that will allow us to sleep at night. nights knowing that there is that money in case an emergency arises. Money that should not be touched except in case of real need.

It is recommended to have the equivalent of 6-9 months of salary in this account , but if we cannot reach that amount in the short term, we should not abandon the goal. It is better to start with what we can and gradually increase until the goal is reached.

By following these simple tips we can make our domestic economy much more resistant to a recession or any other unforeseen circumstance. We will have reviewed our numbers, our expenses and income and by optimizing the budget, we will even have begun to build a savings base.

The key in these times, measure every penny that comes out.

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