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3 Ways to Practice Financial Responsibility During an Economic Downturn

From surging gas prices and an inflation rate that is at its highest since 1981, the U.S. has been hit by tough times that many Americans are feeling all too painfully in their wallets. That’s why taking control of your finances is critical to staying afloat during this economic crisis. 

During these stressful times, making sure you’re on top of your budget and any debt you have will help you maintain financial stability. 

The top actions you can take to be fiscally responsible?

  1. Budget
  2. Save
  3. Pay off your debt

BUDGET: Like any good financial plan, a budget is a vital tool to help you track spending. When you create a budget, you’ll give yourself spending limits, a pathway to achieving your financial goals, and the knowledge about where your money is going. Maintaining your budget can help you decide what services or activities to eliminate so that you have the money to put away for when you really need it.

SAVE: With food up 8% and shelter costs having risen by 4.4% in the last 12 months, according to Forbes, and the national average for gas prices reaching as high as $4.33, according to the American Automobile Association, money can be tight—which means finding the money to put away into savings can be tough. While 20% of your monthly income is recommended, it’s important to pay all your bills on time first. 

PAY OFF DEBT: It may be tax season, but that doesn’t mean you should take your tax return and spend it. Adding to debt isn’t an ideal situation, so it’s a smart money move to put tax returns toward paying down debt or building up your savings.

However, paying off debt is often easier said than done, especially if you’re experiencing financial hardship. Embracing financial responsibility means knowing when you need help. Talking to a credit counselor can turn the financial tide. Together, you’ll go over your finances and create a budget that works for your specific situation. 

During your meeting, the counselor may recommend you enroll in a debt management plan, which can help you pay off unsecured forms of debt like student loans, credit card debt, and medical bills. Your counselor will work with your lenders to lower your interest rate and consolidate your loans into one affordable monthly payment.

Through a debt management plan, you’ll have a budget, a pathway to pay off your debt, and a plan to save. This will help you get out of these turbulent economic times with a solid financial foundation.