How to Manage Money During a Recession

July 28, 2023

A recession can lead to economic setbacks for consumers, including a job loss or reduced income, higher prices on everyday goods and services and lower returns on investments. While most economists don't think we're in a recession yet,1 inflationary prices and rising interest rates have many worried about how best to manage their finances.

Here are some do's and don'ts to help manage your money during tough times.

DO reduce everyday expenses. Review your budget to assess your spending habits. It's a certainty that you're paying premium prices right now for gas and groceries. There are secure apps to help you save on gas, food and creating and managing a realistic budget. If you've seen an uptick in your utility bills, the U.S. Department of Energy's Tips on Saving Money and Energy in Your Home Guide offers proactive ideas to reduce your energy consumption. If you're spending a lot on conveniences like eating out, cut back.

DO reduce the extras. Track your spending for a month, then cut spending on the extras like streaming services or eating out by 5%. You can scale back spending while still enjoying your favorite TV shows, mobile device and internet. For instance, you might be able to lower the cost of these services by switching to a different plan or bundling products. Contact each biller to explore ways to reduce future bills or look for special offers from other providers. Shop around. Many businesses are offering great deals for you to switch.

DO get rid of high-interest debt. In lean times, it's easy to rely on debt, which can create a false sense of security. If you are relying on debt and are consistently carrying balances, take action now. Add up all your credit card debt and focus on paying off the card with the highest interest first, and when it's paid off, focus on the next card. You may want to consider a loan to consolidate your debts and focus on one monthly payment. If you find yourself unable to pay more than minimum payments, it may be time to get some personal coaching. 

DO keep adding to your emergency fund. An emergency fund can keep you from falling into a debt sinkhole. Having savings can help see you pay for unexpected expenses. Set up automatic transfers to an account that's not connected to your checking account. If you haven't started an emergency fund yet, do it today. Work on saving at least $1,000 upfront and then continue adding to that amount monthly.

DO seek ways to earn more money. Even if your job is unaffected by the recession, exploring additional ways to make money might be a good idea. Consider selling items in an online marketplace, selling your skills, or taking a part-time second job. The extra cash could boost your emergency fund balance, which you may need if you lose your job or have to cover an unexpected expense.

DON'T stop investing. When the economy goes through dramatic changes, it's human nature to want to guard against losses. Many consumers will try to stave these losses by taking their money out of the stock market or stopping automatic contributions to retirement plans such as 401ks, 403bs and IRAs. Keep in mind that in times of upheaval, trying to time the market is impossible. That's because market timing involves two precise investing decisions: when exactly to get out of the market, and when to get back in. Stay the course, keeping in mind that your losses now are only paper losses. If you are unsure about your current investing strategy, talk to a financial advisor.

DON'T go it alone. We offer a variety of financial advice solutions to help you manage your money.Visit the advice tab on our homepage to learn more about all we offer including blogs, articles, videos and workshops. And if you need help paying your SchoolsFIrst FCU bills, we're here to help.


  1. Source: The New York Times: Is Recession Staring Us Down? Already Upon Us? Here's Why It's Hard to Say.