Saving during a recession can seem like it is an impossible feat. If you are out of work, you don’t the income levels necessarily to put anything in your gas tank, let alone in your bank account. Even if you do have a job, it doesn’t mean that you are making enough to save. Wages are lower these days, so even the employed may face issues with saving money.
Interest Rates Are Lower In A Recession
Just like interest rates are lower on most loans, they are lower on savings accounts as well. A typical savings account might net you just one percent or less in interest. To get a higher rate, you have to save more money. Typically, an account might not be eligible for a higher interest rate until you hit 10,000 dollars in your account. Not many people have that much.
Stock Market Returns May Be Down
This isn’t always true, but recession tends to bring with it a depressed stock market. This means that gains that you would usually see on stocks are not always going to hold steady in a recession. In fact, at one point during the past year, stocks were worth less than they were a decade ago.
Put Your Money Into Government Investments If Possible
A CD might not yield you a whole lot of money, but they are among the safest investments you can make for yourself. The interest rates are guaranteed for the term of the loan, and they will be realized no matter what the market is doing. Since they are so safe, it is a great way to put your savings into something that will generate income until the market stabilizes.
Save As Much As Possible
No matter how large or small the amount, you should be saving on a regular basis during a recession. You never know when you might be out of a job, or when an emergency will pop up. Having some sort of savings will allow you to solider on for a little while in case you face more financial hardship down the line. If saving isn’t palatable, at least put some money into paying down your debt. It is easier to be broke if you have no debt.
At the end of the day, you are going to want to know the market you are putting your money into. During a recession, it will be harder to make any type of big gains with interest rates being what they are. All you can do is save as much as you can and pay down as much debt as possible until the economy recovers.
Miles Walker writes about car insurance quotes over at CarinsuranceComparison.Org. His latest article looked at the best Pennsylvania car insurance.
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