Observations from One Michigan Bank
While many of the U.S. economic indicators remain favorable in 2020, the spread of the novel coronavirus COVID-19 has a global financial impact. We’ve had 4 economic downturns in the U.S. over the past 30 years. Surprisingly, three of the four downturns occurred at the start of a new decade. Triggers of declines have included changes in monetary policies, global instability (wars), and market volatility, especially with commodities like oil or assets like real estate.
To help you weather times of economic uncertainty, this Michigan bank has compiled the following money-saving and money-making tips.
- Create a Budget. Understanding how you’re spending your money will help you have more control over your finances. We’ve outlined an easy-to-use budget process to get you started. Remember to pay yourself first by depositing into your savings account or your emergency fund.
- Pay Down Debts. Your budget will help you allocate money to reduce credit card debt or make personal loan payments. Keeping debt under control will help lower the stress of an economic downturn.
- Cut Back on Discretionary Spending. Reviewing your monthly expenditures helps you identify areas where you could cut back. Dining out, entertainment, and personal travel are areas to consider pulling back.
- Join the Gig Economy. More than 57 million people in the U.S. do freelance work, with 55% taking on a ‘gig’ as a second job. With the gig economy generating about $1.5 trillion in 2018, looking for an opportunity in this marketplace could help offset some financial uncertainty during a downturn. During the current COVID-19 pandemic many gig opportunities like grocery delivery are in high demand.
Boost Your Professional Value. As of April 2, 2020 the vast majority of Americans are under a stay-at-home order providing many the time to utilize online training or certification opportunities. Investing in additional training or certification programs is a useful strategy for protecting or increasing your earning power. If you’re considering a career shift consider targeting some of these most recent fast-growing occupations.
Planning for the Unexpected
Economic uncertainty doesn’t need to undermine your financial security. With a reasonable budget and a solid emergency savings fund to cover three to six months of expenses, you may be better able to manage through a downturn.
Finding ways to creatively diversify your income through weekend work or freelancing can give you extra money for your savings account. And while it may be tempting to cut spending on auto, home, or medical insurance, keeping premium payments up to date will help protect your finances during emergencies.
Check with teams at Level One Banks in Detroit, Ann Arbor, Grand Rapids, and our other locations in Southeast Michigan to learn more about ways you can prevail during an economic downturn. We'll help you start an emergency savings account, show you how to use a free checking account as a budget tool, and answer questions about credit card or loan debt. Community is the cornerstone of our bank, and we're committed to serving our customers with a personalized, consultative approach. Contact us for support and information.
Many banks in Michigan are currently putting together resource tools to help their clients manage through the current COVID-19 pandemic. Our Level One Bank team is frequently updating our Coronavirus information page with useful information to help our customers during this unprecedented time.
“If you can take control over those things you can, you are better able to negotiate the unexpected.”
-Judy Sheindlin, a.k.a. “Judge Judy”