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Broke in a bad economy. Now what?

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As a possible recession looms, there is growing concern over inflation, high interest rates, and depleted savings accounts. On top of those financial worries, many people are living with lingering stress from the COVID-19 pandemic, not to mention existential anxiety about climate change. It’s enough to make some people wonder if it’s worth trying to save any money at all.

This trend, sometimes referred to as “financial nihilism,” is a slippery slope. With no guarantee that financial goals such as buying a house or paying off student loans will be attainable for them in the future, some millennials and Gen-Zers are focusing instead on purchases and experiences in the now.

“The root emotion behind financial nihilism is a feeling of despair,” says Nick Wolny, senior editor at NextAdvisor. “Americans acclimate to ‘never being debt-free,’ which blunts interest in developing proper savings and investing hygiene.”

Of course, living through a pandemic has exacerbated that feeling for many. “Beyond the health toll, lives were entirely upended,” says Sarah Foster. “U.S. economy reporter for Bankrate. Americans came face to face with the reality of just how short life is, and mass unemployment made people feel as if they’re easily expendable to their employer.”

When faced with so much uncertainty, it may be tempting to stop saving and start spending on short-term gratification. Financial experts advise against this.

“Giving up is not a solution,” says Bankrate wealth management reporter James Royal. “If you don’t make plans to improve your financial life, no one will do it for you, and you’ll be at the mercy of whatever misfortune comes your way.”

So, how are you supposed to save when times are tough? Here are a few ways our experts suggest.

Stay focused

When rethinking your relationship with money, it’s essential to go beyond just fixing bad spending habits. Wolny suggests a more holistic approach to financial wellness, even in the worst of times.

Apply your skills

We all have a variety of skills and hobbies, and often, there are a few that go underutilized at our day jobs. Now could be an opportunity to apply those skills to create additional sources of income, whether through freelance or part-time work.

“Yes, budgeting is important,” says Wolny. “But the amount of willpower you’re burning up to not buy a latté could instead be used to learn a new skill that would generate additional income for years to come.”

Build up cash

As inflation continues to rise, it may be harder to save but that doesn’t mean that building up your cash reserves is impossible. If anything, it’s a reminder of how important it is to have money set aside.

The next few months will be crucial as the possibility of a recession is still high. Wolny encourages individuals to think about their plan B since having lower debt won’t necessarily save you from impending expenses. “Wealth building requires that you both generate enough income and learn how to keep and grow the money you already have,” he says.

Learn more: How to prepare for a recession

Focus on yourself

“Take self-care and your mental health seriously so that you’re actually excited to show up for yourself and your money goals,” says Wolny. This was his biggest takeaway from the pandemic.

And he’s not alone. The pandemic brought up discussions about work-life balance, burnout, and overall mental health to the workplace. As we start to transition to hybrid or in-office culture, it may be easy for you to lose focus on your own well-being, but the effect of burnout on your finances can be substantial. Even worse, it can go undetected as you adjust to making certain sacrifices or harmful routines.

The best way to combat this is to make a conscious decision to put yourself first. If your financial circumstances have you feeling stressed out, try to connect with other people who may be going through a similar situation or even seek counseling.

“When you can get yourself out of survival mode, your thinking changes,” says Wolny. “Social media and influencer culture have us feeling like we should be further along in life. It can mess with your head. Stay the course and focus on stabilizing your unique financial situation.”

Learn more: 3 money questions to ask yourself in a recession

Build your wealth

Well-versed in investing and behavioral finance, Royal understands not only the basics but the limits of one’s financial potential (spoiler alert: the limit does not exist). And while wealth can feel like a concept that’s out of reach for most, Royal says achieving that goal may be simpler than we think.

Pay down your debt

With President Biden’s student loan announcement, many people will find a sizable decrease in their overall debt. This can be a perfect opportunity to start planning to pay off the rest. Even debt that feels impossible to overcome can be tackled with a plan and a lot of patience. According to Royal, debt can hinder your ability to make decisions about your financial situation and adds more stress in an emergency, such as losing a job.

“Plus, if you pay down debt, you get a guaranteed return in the sense that you no longer have to pay interest on the debt,” says Royal. “And it’s tax-free, too.”

Learn more: Credit Card Debt Paydown Calculator

Start investing in stocks

“The biggest misconception is that stocks are only for the wealthy,” says Royal. “Instead, stocks are how the wealthy got that way.” In the last decade, stocks have become much more accessible.

Many money services now offer stock trading including Cash App, Stockpile, and SoFi. You could also look into more traditional brokers such as companies like Charles Schwab. There’s also the option to invest in your 401(k) if your job offers it or sign up for a high-yielding savings account. The key to investing is to find a method that works best for you. For those interested in investing in cryptocurrency, crypto rewards cards like the Gemini Credit Card let you earn crypto rewards on groceries, dining, and other routine spending.

Learn more: How to start investing in 2022

Live below your means

Whether it’s the shopping we do, the events we attend, or the vacations we take, instant gratification is always just a credit card swipe away. And while there is a seed of truth in the idea that money can buy happiness, shopping can also cause regret.

Credit cards make it especially easy to overspend with the promise that you can always pay it back over time. That plan can backfire during hard times when, say, you lose a job and still have to pay off previous splurges. Be mindful of your credit card spending. Instead of relying on later to finance your purchases, prioritize money decisions that bring you closer to your financial goals.

“The U.S. provides huge benefits to people with wealth,” says Royal. “The tax code is advantageous to those who buy stocks and purchase real estate. And the economy is run for those who have wealth. It’s absolutely vital to build wealth so that your money can start making money, and you can enjoy some of these benefits.”

Learn more: 14 easy money saving tips

Change your mindset

From watching her community recover from the Great Recession to keeping Bankrate’s audience up to date on the Federal Reserve’s latest policies, Sarah Foster understands the growing weight of debt in America. While she’s positive there are good times ahead, for the tough times she advises holding on and holding strong.

Start reversing bad habits

While the pandemic slowed the world down, the extra downtime didn’t always mean that healthy habits were developed or maintained once businesses reopened. However, this isn’t the time to double down defiantly on poor financial decisions. Instead, you may need to take a closer look at your budget and learn what type of spender you are. Do you tend to put off important payments or pay only the minimum on a balance? Are you an impulsive buyer? Once you take stock of your financial habits, you can take steps to improve them.

While this does require sacrifices now, Foster says this is the best path toward financial independence and a comfortable retirement. “The best approach you can take to improve your relationship with finances is letting go of your scarcity mindset with money,” she says.

Learn more: How to manage finance anxiety beyond the pandemic

Face the inevitable

Though it can sometimes seem like we’re lurching from one disaster to another, the truth is that this is not the first time society has been in deep turmoil, and it is far from the last time. Hiding or blatantly ignoring the problem rarely makes it more comfortable. Remember, your reality can’t change without you so you need to practice being present for it.

“The unfortunate part of life is downturns are only inevitable,” says Foster. “Recessions at best are a period of decreased job security and economic discomfort. Having a substantial emergency fund can make a difference in affording bills and groceries, as well as sleeping at night when you’re worried about the direction of the economy.”

Learn more: How to build an emergency fund

Let go of the idea of scarcity

Finances are a substantial portion of ensuring our day-to-day survival, and one way to make sure that they continue to run smoothly, even in challenging times, is to look at the bigger picture. There are more ways than ever to make and save money. No longer are you relegated to putting all your eggs into one basket. Once you open yourself up to different possibilities, taking control of your finances becomes that much easier.

For Foster, it’s not only about how you spend your money. “It’s about how you can make your money work for you, so you can afford to take that vacation, buy that house or retire early,” she says.

“The lessons from the coronavirus pandemic might be different,” says Foster. “But its massive economic and financial upheaval is bound to leave an imprint on those who were disrupted by it — which is virtually everyone.”

Learn more: Bankrate’s Recession Watch

The bottom line

Let’s be honest: The future is complicated. But for those who are wondering if there’s anything beyond doom-scrolling, anything to save for or hope for, the answer is yes. There’s always something to look forward to, and the last thing you want is to be unprepared because you were trying to bury your worries in purchases.

So, here’s some final advice: Have fun. Don’t feel guilty about making new memories but don’t neglect to plan financially for your future because it is coming, whether you’re ready or not.

This article originally appeared here and was republished with permission.

Bankrate.com publishes original and objective content to help you make smarter financial decisions. Our award-winning reporters and editors provide expert advice on nearly every major financial decision you may encounter — from purchasing your first home, to selecting a new car, to saving for retirement.

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