10 Smart Financial Moves to Make During a Recession

Recessions have a way of bringing our focus to our finances, not to mention sending our stress levels skyrocketing. That's especially true for our current recession, which doesn't show signs of letting up anytime soon.

Having a financial plan may not solve all of your problems, but it can help you stretch the money you do have a little further -- and help you be ready to take action if things get worse. Here are 10 financial moves everyone would be wise to make to weather the current recession.

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You may have already eliminated the unnecessary expenses from your budget at the start of the pandemic, but if you haven't, now is the time to do so. Look over your bank and credit card statements to get a sense of your monthly spending. Be sure to go back up to one year looking for subscriptions you may have forgotten about.

Cut things like gym memberships or streaming services you're not using. You can always sign up for these services again when things start going back to normal. For now, use the extra cash you're saving each month to put toward some of the other financial goals discussed here.

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An emergency fund ideally contains enough money to cover three to six months' worth of living expenses in case of job loss or another financial emergency. In the current recession, it's not bad to have a little extra money in your fund, if you can afford to save it. Keep it in a savings account or somewhere close at hand so you can access the funds quickly if you need them.

Debt is a burden at the best of times, but it can be even more challenging to handle when you're not working or you're worried about losing your job. Prioritize paying down your debt if you're able to, or look for ways to reduce how much you owe.

You could transfer your credit card debt to a balance transfer card to make it easier to pay off. Or maybe consider taking out a personal loan to give yourself a fixed monthly payment. If you have a mortgage or any other type of loan, now's a great time to refinance. Interest rates have fallen, and you may be able to save money and get yourself a manageable monthly payment.

Continue contributing to your retirement plan if you're able to do so. Regular contributions make it much easier to stay on track for retirement, but that's not possible for everyone right now. If you have to let your retirement plan fall by the wayside for a while, know you will have to create a new plan when you are able to begin saving again.

For now, set aside as much as you're able to and try to avoid withdrawing funds from your retirement account, if you can. This will only set you back further. In addition, it'll lead to a larger tax bill this year -- and possibly in the next two years, if you choose to spread your tax liability for your COVID-19 withdrawals out over three years.

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We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by the Motley Fool. I’d be sitting on a gold mine!” And it’s true. And while Amazon and Netflix have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Simply click here to learn how to get your copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

Your investments may not be doing so well this year, but that doesn't mean you should sell all your assets and get out, or double down and bet on striking it rich with a company that's been doing well during the pandemic.

Now's the time to revisit your investments and make sure you're well diversified. Make sure your investments align with your risk tolerance as well. This usually declines over time. When you're younger, you can invest more aggressively because you have years to recover if your investments suffer a loss. As you get older, you usually want to invest more conservatively to protect what you have.

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A side hustle is a nice way to earn some extra cash anytime, but in a recession, it can be a lifeline to those who have lost their jobs. It may not replace your regular job, at least not right away, but it can provide some money coming in so you don't have to drain your emergency fund as quickly.

Just remember, you're responsible for setting aside taxes on your self-employment income and paying this in quarterly. Consider opening a separate savings account for your tax money so you don't accidentally spend it.

If you were planning a large purchase, like a new home or car, consider holding off until you feel more financially secure. You can keep saving for these goals if they're important to you and just make a larger down payment when you're ready to buy. Or if you find yourself in immediate need of cash, you can borrow from these savings and delay your purchase a little longer.

If you know you're not going to be able to keep up with your payments, reach out to your bank, credit card issuer, utility companies, and anyone else you owe. Take the opportunity to explain your situation. A lot of people are experiencing financial hardship right now, and companies are offering new assistance programs that enable consumers to defer payments or reach other agreements without ruining their credit.

See what assistance is available to you, but remember to ask about how it works and when you'll have to return to your regular payment schedule. You don't want to end up running into problems with late payment fees down the line.

People are spending more time at home these days, and many have lost their jobs or are worried about losing them. If you're one of them, it doesn't hurt to update your resume and consider expanding your professional network. You can also take professional development courses to learn new skills to make yourself more appealing to new employers. There are plenty of opportunities available online that you can do at your own pace.

ALSO READ: Jobs That Are in Demand During COVID-19

We're living through unprecedented times, and your financial situation can change rapidly from one month to the next. That's why you should schedule at least monthly check-ins with yourself and your household to make sure you're sticking to your budget. This is also a good time to look for any additional ways to stretch your money a little further. Making small, regular changes like this is easier than trying to make larger changes once you've run out of money.

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We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by the Motley Fool. I’d be sitting on a gold mine!” And it’s true. And while Amazon and Netflix have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Simply click here to learn how to get your copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

We may all be living through a pandemic and a recession, but it'll affect everyone in different ways, so the way everyone gets through it will be different as well. Try as many of the above tips as makes sense for you and always keep your eye out for opportunities to cut your expenses or to increase the money you have coming in. Even small changes can have a big impact on your long-term security.

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