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Recession-Proofing Finances – 5 Tips for Employees

Recession-proofing finances is not something people have been concerned with for quite some time.  Many financial professionals believe that the arrival of a recession is imminent.  In other words, it’s not a matter of if a recession happens, but when.  In light of rising inflation, soaring gas prices, and a heated housing market, recession-proofing finances seems prudent.  Now may be an optimal time to remind employees to focus on long-term financial goals, such as saving for retirement, while hunkering down and preparing for a time of economic distress.

According to Steve Siebold, a Certified Financial Educator and author of the book, “How Money Works“, these five tips can help your employees fortify their finances for a possible recession:

  1. Tighten up: Reduce non-essential expenditures by 10% per month, including dining out, entertainment, alcohol, etc.  Inflation and supply chain issues are causing prices to rise dramatically.  Now is the time to cut back.
  2. Sell off collectibles: Coins, baseball cards, comic books, stamps, guitars, etc.  These assets can help bolster your employees’ emergency fund or pad their savings.  Many people have these items put away in storage from their childhood, just sitting in a closet or up in the attic, and there may be big money just sitting there collecting dust.
  3. Cancel subscriptions: Cancel or cut back on subscriptions to movies, music, and other monthly charges.  It’s always possible to re-subscribe when circumstances improve.  Those subscriptions may seem like only a few dollars and not a big deal, but eliminating multiple small monthly payments can add up to big savings.
  4. Reposition savings: Most Americans keep their money in banks, most of which pay less than 1% interest. Wealthy people keep their money growing by collecting 5% to 10% interest – sometimes even more.  No matter their level of wealth, your employees may want to consider talking with a financial professional.  Primarily, in the interest of recession-proofing their budgets.  An Advisor who can help them make sure their money is working for them, and that their portfolios are positioned for growth.
  5. Cancel cable and the landline: The price of cable is more costly than most people realize. Instead, more affordable streaming services like YouTube TV and Hulu cost a fraction of cable. Similarly, these days there really isn’t a reason to pay for both a cell phone a landline.  Opting for just the cell phone could save your employees some money.

Of course, as economic uncertainty and market volatility creeps in, employers have an opportunity to help their workforce.  They can do so by helping to manage financial stressors.  Also consider employing a strategy for recession proofing finances – instead of panic.  It’s important to remind employees to focus on their long-term goals and stay the course.  Especially true when it comes to saving and investing for their retirement. Continuing to save, and not exiting the market when prices are low is very important.  Combining that with the five tips above, can help place employees in a position of financial strength.

Steff Chalk

Steff Chalk

Managing Editor at 401kTV
Steff C. Chalk is Executive Director of The Retirement Advisor University, a collaboration with UCLA Anderson School of Management Executive Education. Steff also serves as Executive Director of The Plan Sponsor University and is current faculty of The Retirement Adviser University.
Steff Chalk
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