Hello, darkness, my old friend.
As a child of the Great Recession, economic downturns aren’t new to me. Nobody loves a recession, but it’s just a natural part of our economy.
Problem is, recessions wreak havoc not just on our economic system, but our personal finances. Your job is almost always on the line and, meanwhile, bills for food and rent keep piling up.
It’s not a great spot to be in, for sure.
While frugality won’t solve the world’s problems, a healthy dose of frugal living can make a recession bearable.
Frugality is awesome because you not only save money, but make do with what you have. It’s the ultimate exercise in mindfulness and penny pinching—two of my favorite things.
If you’re staring down the barrel of a recession, breathe. Instead of freaking out about the world coming to an end, start planning. I made these 6 frugal moves to survive the Great Recession or whatever economic crash befalls the world next.
1. Look at your mindset
Here’s the thing about money: it’s a tool. Your money outcomes often start with your head. Depending on your mindset, you’ll feel rich or broke as hell.
During a recession, stop telling yourself how broke you are. Or how you wish you could buy XYZ. Or how things used to be so great.
A growth mindset will take you far during a recession. Gratitude also goes a long way to make you realize how you have what you need to survive. If you have food, water, and shelter, everything else is noise.
Frugality is about spending money mindfully, on things that matter to you. During the recession, I proudly sported thrift store clothes to save some cash. But I spent money, instead, on nice, organic produce. This is about spending dollars where they really matter, not living like a hermit.
Step one is to change your money mindset. To be successful, you have to acknowledge that finance in a recession is different than finance during normal times.
2. Know your money
Open a spreadsheet right now and create a budget, even if it’s a super simple one.
Where does your money go every month? What do you spend it on? What are you saving? What are you earning?
You have no way of knowing without a budget. Once you know your income and expenses, drop everything into buckets. That could be:
- Debt payment
… and so on. This sucks because the numbers won’t lie. I dang near had a heart attack the first time I saw we were spending $1,000/mo on food.
3. Tackle small expenses
Have you ever heard of the Latte Factor? It’s the idea that small, regular expenses add up to something monstrous. A $5 latte doesn’t sound so bad every morning, but if you spend $5 every day, that’s, like, $150 a month.
The goal is to tackle several of these small, meaningless expenses so you free up extra cash. Remember, the point of being frugal isn’t to stop spending money entirely. It’s to spend money where it matters.
If you can cut out the small stuff, great. But if you get deep, spiritual satisfaction from a daily Starbucks run, keep it. Just spend your money where it matters and stop buying things that don’t serve your goals.
That might mean:
- Cooking at home instead of grabbing takeout.
- Eating more vegetarian meals (meat is expensive!)
- Dropping your wifi subscription package.
- Baking your own desserts or bread.
- Unsubscribing from Netflix or Hulu or Roku.
- Buying used items instead of new ones.
- Cutting your own hair and doing your own salon treatments.
- Making DIY gifts or cards.
You get the drill. See what little expenses you can trim from your daily spending to keep more moolah in your bank account.
4. Change your big expenses
Don’t get me wrong—you save a ton of money by overhauling the little expenses. But your big expenses, like car payments and rent, are worth a second look, too.
When I was getting out of debt, I moved across town to save $400 on my rent. Yes, the neighborhood was basically a giant shack, but still. I even sold my car so I wouldn’t have to worry about that monthly payment.
We easily saved over $1,000 a month doing this. When you’re trying to pay off debt or bulk up your savings, these changes matter way more than your daily Starbucks latte.
5. Get a side hustle
If the economy’s gone to hell, it means your job is never 100% secure. Surviving a recession means you need to make money from multiple places. This way, if you lose your full-time job, you can at least stay afloat.
Side hustles are a great way to boost income in your off-hours. Try a decent-paying side hustle like:
- Dog walking
- Driving for Uber or Lyft
- Renting your home on Airbnb
- Reselling on eBay
I started freelance writing on the side to help pay off my student loans and it worked marvelously.
6. Boost your professional value
As fun as side hustles can be, you want to preserve your full-time job at all costs. Losing your job is never great, but losing your job in a recession can put you in deep doo-doo, fast.
Make yourself more valuable as a professional. You want your employer to keep you, but you also want skills that could help you find a job faster.
Get a free certification online. Learn new skills, like coding, to make you better at your day job.
Now is not the time to settle or be still. Improve your technical skills so you’re a force to be reckoned with in a competitive economy.
The bottom line
There’s no sugar-coating it: recessions suck. They really do. When everyone’s going through hard times, it can feel like there’s no end in sight.
Frugality won’t solve the recession, but these 6 frugal approaches will help you get a better handle on your money during an economic downturn. Prepare for the worst, but hope for the best. Live frugally so the recession doesn’t capsize your finances.
Contributor’s opinions are their own. Always do your own due diligence before investing.
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