3 Tips To Help You Save Money During The Recession 

With all indications pointing to an immediate recession, millions of Americans are finding themselves financially unprepared. According to a 2019 Bankrate poll, only two in five people were ready for an economic downturn in the next 12 months. With all the common consequences like climbing unemployment rates and lowered interest rates manifesting, consumers are scrambling to protect themselves from the fallout by amping up their savings and tackling any debt they have. For those looking to increase their savings starting this month, putting money away in a recession and knowing where to start can be nerve-wracking.

The tax submission deadline has been extended to July 15th, thanks to the pandemic, which gives you just a few weeks to finalize your tax returns for the year. However, a staggering  90 percent of consumers choose standard deductions every year. Instead, opt for the 1040 form when filing so that you can detail or analyze your deductions. Above line deductions, such as the student loan deduction or self-employed deduction, can also reduce your taxable income – and final tax amount. For couples, entrepreneurs or employees with lower wages than normal, the savers’ credit may also be worth a look.

Also, with the standard deductions rising, many experts are fearful that this year may be the last one in which taxpayers may be able to itemize deductions. The new tax law will see popular items such as property, sales tax, and un-reimbursed employee expenses being removed from the list, which makes it even more prudent to capitalize on those deductions now while you can.

Credit cards are proving to be incredibly useful during the pandemic, but they also come with one of the highest costs. According to a survey by CredutCards.com, 47 percent of Americans are now carrying credit card debt, and 23 percent of them have increased their credit card balance due to the Covid-19 pandemic. With credit card interest rates hovering around 19 percent, this means consumers end up paying around $855 or more in credit card interest annually.

If you have a good track record of paying your credit bills on time, it may be time to negotiate your rate with your credit lender. Before having the conversation with your lender, be sure to have your credit numbers ready, including your debt to income ratio, interest paid until date, and credit score. A free credit report from one of the three credit bureaus can help you with this. Credit card lenders are also offering additional relief options that you may be able to take advantage of. For instance, American Express and  Wells Fargo have financial assistance programs where you can request that annual account frees be waived – an amount you can redirect into your savings account. As a bonus benefit, reducing your credit card interest rate also means you are more likely to keep up with monthly payments and work on rebuilding your creditworthiness if needed.

One of the easiest ways to amp up your savings in any circumstance is to reduce your outgoings. In a recession, this will prove to be even more useful as incomes decline and consumers try to keep control of their finances. Doing a bill audit simply means going through your current monthly/annual bank bills and finding ways to reduce them.

Start by getting hold of your bank statements for the last three months and analyzing them for spending patterns, impulse purchases, and necessary expenses. For the unnecessary ones, cancel or swap to a free alternative. For instance, subscription to TV streaming services or Amazon Prime could be costing you at least $119 per year. If not used regularly, it is time to cancel your subscription. Companies like Amazon also offer a refund for midway cancellations, which you can add to your savings pot.

It is also important to keep correlating your expenses with your budget. The idea is to keep your spending habits as low as possible, keeping only the expenses you cannot live without. The future may be uncertain, but you can take steps to mitigate the impact on your finances – starting with your savings. Doing so now means you are in a better position to weather the storm and come out on the other side when the recession is over.