For those who have experienced one, it can cause a recession story. We’re not officially there yet (at the time of this writing), but it’s only natural to worry about rising prices due to tariffs and potential aftermaths.
Nearly nine in 10 Americans (85%) are concerned about tariffs, with one of their biggest concerns being tariffs (45%) leading to a recession, a Nerdwallet survey found.
I remember how the Great Recession destroyed jobs across the United States, including mine. After graduating in 2009, I worked as an entry-level executive assistant for a nonprofit for four months before being fired.
I had limited financial knowledge, a short history of work, and a lot to prove that I would invade my ultimate goal: journalism. Along the way, I have acquired valuable lessons that may help you manage your finances in a volatile economy.
1. Save what you can
My short career history relied on a savings account because I disqualified receiving unemployment benefits. Even a small $500 emergency fund could prevent you from holding back your debt, and I took away enough socks to cover the costs of months.
If you are still employed, “pay yourself first,” says Samuel Deane, financial planner at Rora Wealth, an independent financial advisory firm. “Even if it’s $20 each time you get paid, just clean up the $20 first and then live your lifestyle for the rest of your time.” If possible, automate it with a direct deposit.
If you lose your job, saving will obviously be difficult. If you are eligible, apply for unemployment and contact your landlord, creditor, local nonprofit organizations, and options that may require you to seek relief. If you are still employed but have paid cuts, consider taking part in side gigs, reducing your car, changing your living arrangements, and reducing other expenses.
2. Think carefully before rejecting a job offer
After many interviews and dead ends, I applied for an administrative role at the accounting firm and was hired in December 2009. It paid about $7,000 less than my previous salary. I knew it wouldn’t get my career off track, but it covers most of my bills so I took it.
Amanda Grossman, now a certified financial education instructor based in Virginia, made a similar compromise after being fired in Florida in 2008 as a market researcher.
“(Counselor) said, “Look, the economy isn’t going well. You need to do that job, it’s going to keep falling. You won’t be able to find a job,” Grossman said.
If your sector is hurting and you’re lacking unemployment benefits and savings, even a less ideal role can help you ride the recession.
3. Be smarter about money
There are countless financial literacy resources online and in your local library.
I struggled to save money on a lower salary. Credit cards became my emergency funds. I don’t recommend this approach, but it was tough in the days. If you’ve learned about student loan repayment options and debt settlement options, you’d have plunged into interest and dumped your debt faster.
I wish I had made these financial moves:
I used a Balance Transfer Credit Card. Paying the fee and moving my debt to a new card with a long 0% APR window would save a lot of money. I met a credit counselor. The counselor was able to review my budget and pay to assess whether I was eligible for the debt management program, consolidated with a lower interest rate to a single payment. I called my credit card issuer to understand my options. You could have asked about financial difficult programs early on to make your debt more manageable. Depending on the situation, you can ask for an increase in credit limits, negotiate interest rates, or request product changes to a credit card that does not charge an annual fee. Funded purchases are strategic. Instead of charging a purchase at a high interest rate, I might have qualified for a new credit card with an introductory 0% APR. If you are not qualified for this offer recently, some issuers may borrow against credit card restrictions at a fee or fixed interest rate.
4. Establish multiple income flows
I still wanted journalism experience and extra income, so I learned to film and edit videos in addition to my new full-time job. I started freelance in 2010. A year later, he also launched a small social media consulting business.
Grossman had other goals too. “I’ve always wanted to be a writer. I love money, love love, love talking about money,” she said.
While she was unemployed in Florida, she launched her blog, “Frugal Confessions.” She learned new writing skills from books and sought feedback from newspaper editors. In 2013, she quit her environmental job in Texas and ran her blog full-time.
5. Protect your credits, but protect yourself first
When testing recessions and economic conditions, many normal financial rules do not apply. You may need to carry your credit card balance to buy groceries or to deal with emergencies. You may only need to make minimum payments to cover your rent.
Even with three jobs, I sometimes struggled to make minimum credit card payments due to high balance and interest rates. I never defaulted, but I was stressed and scrambled. I wanted a good credit record they would build to build so they could qualify for a low interest rate offer that they qualify for now.
If you can waive it, that’s a valuable goal, but in emergencies, prioritize payments for essential items such as shelters, food, utilities, costs and more that will help you work. Ultimately, you have time to deal with your credit score.
6. Move calculated money
Eventually I left the apartment and moved in with my roommate. I also read the post-recession climate and learned how to seek salary increases in consecutive jobs. Every year, my workload and responsibility increased, so I insisted on a higher salary. It’s uncomfortable to ask at first, but it’s easy. The extra money eventually paid off my debt.
The effects of the recession are mostly out of your control, but your response is not. Strategic steps allow you to isolate yourself and create new opportunities.
Melissa Lambalena writes for Nald Wallet. Email: mlambarena@nerdwallet.com. Twitter: @lissalambarena.
The Great Recession in this article taught me a lesson that still appeared in Nerdwallet.
