“Recession” is a scary word. Even if you’re employed, it’s a reminder that joblessness is just a market dip away. If you’re not, it means burning through your nest egg while begging for work. Even those who planned financially for an event like COVID didn’t know it would crash the global economy. Now that it has, people are taking a hard look at their savings accounts.
The trouble is that most strategies for saving money are obvious. Chances are, you’ve already cut back on meals out. Despite the warming weather, you’ve probably turned down your A/C. What else can you do? Here are a few more ways to shore up your savings:
1. Claw Back Some Of Your Spending
Spending money in order to save money might sound like a terrible strategy. But there are a lot of ways to save on transactions you have to make one way or another. Browser extensions like Honey and Ibotta automatically apply coupons to popular e-commerce sites.
Instead of buying cat food and litter at the grocery store, why not get the discounted price by ordering it online? For in-store purchases, look for loyalty clubs. If you buy your shampoo and soap at Target, you might be able to save a few bucks by buying it through Target Circle.
Wherever you shop, use a debit card that rounds transactions to the nearest dollar. By automatically depositing the difference between the purchase price and the next dollar into a linked account, round-up systems use the money you wouldn’t miss building your savings.
2. Go Subscription-Free
Yes, you’re stuck at home, and yes, your Netflix subscription is only $13 per month. But if you’re like most people, you’re spending a lot more on subscription services than you realize. A West Monroe study found that 84 percent of Americans underestimate the amount they’re spending on subscription services. Most participants guessed they were spending under $100 each month on subscription services — in reality, they were spending more than $200.
If you can save an extra $200 per month, your savings account will be $2,400 fatter by the end of the year. Challenge yourself: Cut every subscription service aside from your water, electricity, trash, and internet.
How much do you really need cable television? Your dog will be just fine without his monthly treat box, and it’s not like you need a wardrobe subscription when you’re staying home due to social distancing.
3. Consolidate And Pay Your Debts
If you’re trying to build your savings while in debt, it can be tempting to push it off. Instead of writing a check each month, you could put that amount into savings. In fact, you should pay your debts down. If you don’t, you’ll only pay more later, thanks to interest charges. Before you start settling up with lenders, however, look into debt consolidation.
Because interest rates are so low right now, you may qualify for a rate that beats anything you’ve been previously offered. Shop around by checking multiple local banks, credit unions, and online lenders. If you have mortgage debt, consider a consolidation strategy called a “cash-out refinance.”
Basically, a cash-out refinance lets you convert home equity into cash to pay off other debts. Mortgages tend to have the lowest annual percentage rate of common consumer debts. Rolling credit card debts into your mortgage, for instance, lets you pay one low-interest loan rather than multiple high-interest debts.
Either sock the money you save straight into savings or start overpaying on your mortgage. The sooner you pay it off, the less interest you’ll pay. And remember, mortgage interest is tax-deductible, giving you another source of savings around tax time.
4. Check For Unclaimed Assets
About one in 10 Americans have unclaimed property, amounting to billions of dollars. Unclaimed property can be tangible, like the contents of a safe deposit box, or intangible, such as tax refunds or certificates of deposit.
Check with your state treasurer. In many states, you can simply search for unclaimed property online. Also, check with past insurers, banks, and landlords. Although they’re legally required to hold unclaimed assets for a certain amount of time, don’t expect them to make an effort to get in touch with you.
Finally, while you shouldn’t milk your friends and family when times are hard, do ask about outstanding debts. If you gave your brother a few hundred dollars as a security deposit for his last apartment, perhaps he’s in a position now to pay you back.
5. Park Your Car
You probably know better than to buy a car in the middle of a recession. You might be surprised, however, by the amount you could save simply by driving less. This isn’t just about filling up less frequently, either. Although gas costs do add up, the bigger culprits are probably repairs and insurance.
If you manage to avoid even one major mechanic bill, you might net yourself $1,000 or more. And be sure to call your insurer: Driving half as many miles could cut your annual premium by hundreds of dollars.
If you’re able to work from home, do it. If you only need a gallon of milk and can get to the grocery store by bike, there’s another chance to save. Just make sure you don’t replace driving with delivery services, which will nudge your budget in the opposite direction.
6. Snag A Side Hustle
What if you’re hustling at work and saving every penny you can, but your savings still aren’t where you want them to be? Get another income stream flowing. There are dozens of different ways to do it. Drive for Uber. Transcribe interviews for a site like Rev. Deliver restaurant orders for DoorDash. Write or design whitepapers for content marketing agencies—mow yards around your neighborhood.
A side hustle also decreases your risk through diversification. That way, if your employer tanks, you aren’t suddenly left without a source of income. Channel your recession stress into something positive: building your savings account.
The practices you establish now could not only help you weather the uncertainty, but also accumulate enough to achieve your other life goals. Whether you want to take a vacation, buy a home, or retire early, it all starts with a fuller savings account.
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