3 Ways To Save 3 Months of Expenses in a Recession

3 Ways To Save 3 Months of Expenses in a Recession — Even If You Grew Up Broke

Wealth activist and TikTok influencer Lea Landaverde talks about financial stability in uncertain times, and her top priority is having an emergency fund. She offers advice on how you can do this, even in times of financial uncertainty and even if you grew up in an environment of scarcity.

Check Out: Here’s How To Build an Emergency Fund Without Blowing Your Budget

What Does Financial Stability Mean?

Financial stability and security start with having three to six months’ worth of expenses in a high-yield savings account, according to Landaverde. She acknowledges that building an emergency fund in a recession can be challenging, but difficult economic times make it more important than ever.

“If you don’t have a high-yield savings account, you are sleeping on interest, baby,” said Landaverde. And she’s right — it’s important to keep your emergency fund liquid so you can get at it when you need to, but that doesn’t mean you need to keep it in a piggy bank. Putting it in a high-yield savings account means you can earn some money while you’re not using it, which is a win-win.

Here are Landaverde’s three ways to save three months of expenses in a recession — even if you grew up broke.

Discover More: Here’s How Much Cash You Need Stashed To Survive a Recession in the Midwest

Be Mindful With Your Spending

Landaverde cautions her followers to be mindful with their spending and cut costs where they can. “Now is not the time to be splurging on crazy things,” she said.

While you want to spend mindfully all the time, it’s particularly important during economically uncertain times. Every dollar you don’t spend on something frivolous is a dollar you can put toward that emergency fund. And that’s how it grows — one dollar at a time.

Have Multiple Sources of Income

There are two ways to improve your financial situation: earn more or spend less. If you do both of them at the same time, you’ll reach your goal that much faster. Landaverde understands this and encourages her followers to have more than one source of income.

“I’m sorry, but this economy does not allow us to live off one job. We have to have multiple sources of income,” Landaverde said. “You’ve got to get creative, whether it’s DoorDash, Instacart, you’re selling food, you have a skill set that allows you to create goodies, you sell stickers — it doesn’t matter. Create a side hustle or another source of income.”

Another advantage to having multiple income streams during times of economic uncertainty is that if one income source goes away, you still have the others. If you lose your full-time job, your side hustle can still keep the lights on. If you have to pull back on your part-time gig, your full-time job will pay the bills. The more streams of income you have, the better protected you will be.

Pay Off High-Interest Debt

This may be the most challenging of Landaverde’s suggestions, but it may also be the most effective. Paying off debt when you’re trying to save isn’t easy, but the results are doubly rewarding. When you pay down debt, you free up more money to put toward your savings. And your overall financial picture improves.

“Your debt is what’s eating you alive, said Landaverde. “So if you can, prioritize and balance living and paying down debt.”

Having an emergency fund that is equal to at least three months of living expenses is the first step toward financial stability and security. It gets you off the treadmill of living paycheck to paycheck and having to scramble to cover even the smallest, unexpected expense. And, as Landaverde said, it breaks the cycle of scarcity and poverty, setting you and your family up for a more secure financial future.

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This article originally appeared on GOBankingRates.com: 3 Ways To Save 3 Months of Expenses in a Recession — Even If You Grew Up Broke

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