Saving for a Possible Recession

Gas prices are up and climbing daily. Food prices are skyrocketing. Milk alone per gallon is double what many people paid just five years ago. Every where you look, sellers are raising their prices or dropping the amount of product you get per purchase. Now experts are saying that we could be heading to another recession. What you do now to protect yourself could provide comfort and a buffer in a time where there seems to be more money leaving your pocket then ever before.

One of best tips is to start an emergency savings account. This account can provide a safety net in case of a job loss, major medical expense or disability, disaster, or any other major change in your income.

Total up your total bills per month. Add in an estimate of how much you spend each month on gas, food, car maintenance, insurance, clothing, medical expenses, and any other regular expense. Then take those extra expenses that pop up throughout the year such as appliance repair or replacement, car repair, taxes or any various other expenses that may occur. Divide those annual expenses by twelve and then add those amounts to the total of your regular expenses. You then have an estimate of how much you spend per month of every year.

It is good to have at least three months worth of expenses saved in your emergency savings account. The best scenario would be to have six months or more in the account. Start with what you can manage and deposit regularly. Ask your bank if they can take a regular amount out of your regular account and deposit it into your emergency savings account. You can write the amount out of your account just as you would any other bill and it would help prevent the temptation to spend the amount earmarked for savings.

Be sure to keep tabs on the amount in your account. You may be able to garner more interest and receive more back for your deposits in money market accounts or certificates of deposit. Be aware that some of these account types may have penalties for early withdrawal, but that may also serve as an incentive to keep the money in the bank.

It may seem daunting to save six or even three months worth of expenses if you are on a tight budget, but saving even small amounts can add up in the long run. Take even twenty or thirty dollars each pay check and deposit it. This could mean one less dinner out in a pay period. Twenty-five dollars deposited once every two weeks can mean a savings of $650 over a year without even factoring in interest. This could be a good start to a healthy emergency savings account.

You can probably find other ways to save as well. Skip that trip to the coffee house in the morning and take that five dollars that you would spend there three times a week and that is already another fifteen dollars you can add to your account for an additional $780 in savings. Just one less dinner out per pay period and three less trips to Starbucks a week and you could have almost $1500 in your emergency nest egg. This sum is a healthy start to a cushion that could pay off big time.

These are just two small ideas that could help you build an account that saves you more then just money, but also stress and heartache. It just requires a very small sacrifice and the act of actually depositing the money into the account.

An emergency savings account or nest egg can serve to alleviate some of the pressure that the rising prices and threat of recession is putting on us. The task can seem daunting at times, but the rewards are great and it is worth the effort. Establishing an emergency or rainy day reserve could be the best thing that you do for yourself in these trying financial times.