GREEN BAY (NBC 26) — Groceries, gas, bills, it all adds up fast. And with talk of a possible recession swirling, many are asking: Is it too late to get my budget in order?
Financial advisor Ryan Freitag, with Edward Jones in Green Bay, says it’s not.
“It's never too late to prepare for a recession or a difficult economy,” said Freitag, of Edward Jones in Green Bay.
In fact, he says there are five key steps you can take right now to protect your finances even if money’s already tight:
1. Start with Your Budget
It might sound simple, but Freitag says the first step is grabbing a pencil and paper. “Write out what money is coming in and what’s going out. Understand where that money is going,” he said.
Tracking your spending, what is necessary and unnecessary in your life, can help you see where you can cut back and regain control.
2. Build an Emergency Fund
Even a small cushion can be a lifesaver in tough times.
“We like to see three to six months’ worth of expenses in that emergency account,” Freitag said. He says having an emergency fund has helped a lot of people stay out of debt. “You need new tires. You have a problem with the house. Somebody gets sick. You have some assets set aside, so you're prepared for that,” Freitag adds.
Start small if you need to—what matters is getting started. Experts recommend having 3 to 6 months of cash available in an emergency account.
3. Tackle Your Debt
With 77% of American households carrying some type of debt, according to NewYorkFed.org, paying down credit cards should be a top priority. Knowing what you owe and making a plan can relieve some of the stress.
“What I've really found the most important is, number one, they should sit down and look at their debt, write out their debt, what the balance is, what the interest rate is, when the next payment is due,” says Freitag.
4. Don’t Skip Insurance
Now is the time to make sure your home, family, vehicles, and lifestyle are protected. A crisis is hard enough. Without coverage, it can get worse fast.
5. Make an Estate Plan
“Work with a local attorney to set up a will or a trust,” Freitag said. “That way, if something happens, your assets can go to your loved ones.”
Freitag recommends talking to a financial professional to help get your budget and your financial planning on track, especially if you’ve never done it before
“I think the key to financial stability in uncertain times is really having a financial plan,” Freitag says. “Understanding where your money is going, and writing down what's necessary and what's discretionary, and then really understanding what you're willing to sacrifice.”
