Don't panic, prepare.
Let's talk about how to prepare for an economic downturn. Because no, you can't control it. But, yes, you can prepare for it.
Last week, we broke down some of the more immediate ways you might be impacted by the Big, Beautiful Bill that just passed. But, while it might be getting the most attention, that's not the only economic shift that could affect your wallet right now.
We’re looking at inflation, interest rates, unemployment… the vibes are uncertain.
And uncertainty is rarely the hallmark of a thriving economy.
But we're not just going to panic and spiral - we're gonna prepare like the smart, sexy, rich b*tches we are.
Here’s where to start:
Build up your emergency fund
No matter the state of the economy, an emergency fund is a must.
But here’s the reality:
- Less than half of U.S. adults have three months of savings
- 1 in 4 have no emergency savings at all
- And 33% of Americans have more credit card debt than savings, according to Bankrate.
That’s a big deal, especially since 37% of Americans dipped into savings in the past year. If you lose your job, total your car, or have a health scare, your emergency fund is what keeps you afloat and out of debt.
Ideally, you should save 3–6 months of expenses. If your job or industry feels unstable, aim for the higher end.
→ Want to know your personal savings target and how long it’ll take to hit it?
Our Emergency Fund Calculator will tell you how much you need to save for your personal lifestyle, and will calculate how long it will take you based on how much you can save monthly, or how much to save monthly based on how soon you need it.
If saving 3-6 months' worth of expenses is impossible for you right now, focus on saving at least $1,000 to keep you from going into debt in an emergency.
2. Save on healthcare - tax-free
If you have access to an HSA or FSA, now’s the time to use it.
These accounts let you set aside pre-tax money for health expenses, meaning you save on taxes and on medical costs.
- HSA = long-term perks. Balances over $1,000 can be invested, and the money rolls over forever. This is a legal way to save extra for retirement!
- FSA = use it or lose it. You can’t invest the money, and it usually expires at the end of the year.
That said, there’s a surprising number of everyday things you can buy with these accounts - tampons, sunscreen, hand sanitizer, even red light therapy masks.
As we mentioned in the last newsletter, healthcare costs are projected to rise, even if you're not on Medicaid. Any chance to save? Take it.
Don’t have access to an HSA or FSA? Start setting aside a little extra for future healthcare expenses anyway.
3. Pay down debt while you can
If your budget tightens later, you don’t want high-interest debt hanging over you.
Whether it’s credit cards, student loans, or medical bills, the best time to make extra payments is when you can - not when you have to.
That said: Don’t pay off all your debt at the expense of your emergency fund. You don’t want to be debt-free and still unable to handle a crisis.
If you're paying off student debt and you're confused by all the changes happening or are unsure of how much your payment is now, contact your loan servicer and make sure you're making the right kind of payment.
And if you have multiple types of debt or loans, especially if some are higher interest, you might consider consolidating them into one loan. Here is a great explainer on debt consolidation and how it works:
Need help paying off your debt? Our Debt Repayment Calculator and Tracker will help you figure out what order to pay your debt off in, how much to pay, how long it will take you, and then you can track payments - all in the same tool!
Take care of your future self today. She’ll thank you later.
Wishing you a rich life,
Lora at She's a Lot
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