The term recession is coming up a lot lately. As many people experience a rise in the price of commodities as well as widespread unemployment and layoffs, you might be wondering if we are currently looking at a recession.
Those who experienced the 2008 recession might be especially concerned as they notice similarities between the financial climate then and now. These similarities include the soaring price of houses, comparable levels of inflation, and a spike in interest rates. People are on high alert wondering if these parallel circumstances are leading to the same kind of downward turn in the economy.
First, let’s look at what causes a recession.
Recessions are caused by a number of factors:
Recessions occur when there is a significant decline in economic activity which can happen in two ways. The first is if the gross domestic product declines for more than two consecutive quarters. The second is if there is a decline in economic activity across the board, such as consumer spending and unemployment.
When the Federal Reserve raises interest rates, which is happening now, it slows the market. People are less likely to take out loans which hurt businesses and impact the economy overall.
When the economy ‘runs out of gas’ across the country, it’s a recession. Recessions are hard on everyone; companies can suffer losses, or face going under, and people fear losing their jobs. You might feel the effects by experiencing lower wages, or perhaps the loss of a car, or a home.
What You Can do to Prepare:
Luckily, recessions do come to an end, and there are many ways to survive such economic setbacks. Portage Bank offers a variety of services that can help guide you and prepare you for potential financial challenges. Listed below are some great tips for getting ahead even in financially difficult times:
- SAVE MONEY
It’s best to save money in high-yielding interest accounts, savings accounts, retirement, and money market accounts, or stocks and other securities. When you have enough money saved up, invest it wisely so it will grow over time. Portage boasts some of the most competitive rates coupled with the ease of online banking from anywhere.
- COMPETITIVE RATES
As Federal interest rates are on the rise, it is important to find a financial institution that can offer competitive rates. We offer competitive interest rates on personal, auto, commercial, or home loans which lowers your monthly payments. Lower interest rates help you save money both in the long run and short term.
- CREATE A BUDGET
Creating a budget helps prevent overspending and allows for proper prioritization of expenses such as food, shelter, and utilities. If you don’t already have one, try using an app like Mint or You Need A Budget (YNAB). This can help you save money in case of an unexpected medical bill or loss in wages. Portage can set you up with all the latest online banking options to make budgeting a breeze.
- REDUCE & CONSOLIDATE DEBT
If you have credit card debt, try to reduce your balance. Consider reducing variable rate loan balances if they’re too high relative to their original value. It’s also helpful to consolidate multiple debts into one with the potential of getting a lower rate of interest. Portage Bank can help anyone, anywhere in the country explore their loan options. However, we have Loan Production Offices conveniently located in Ceylon, Minnesota, Bellevue, Washington, And Coeur d’ALene, Idaho.
We Can Help!
Whatever happens in the current financial climate, Portage is one step ahead of the game. We are always paying attention to any economic changes, preparing for all contingencies, and we are proactive with our financial planning.
At Portage Bank, we are available to explore these ideas as well as other ways to save. Please contact us to address further concerns or questions regarding your financial situation. We can help guide you along your financial journey so that you can still achieve your dreams, regardless of the financial climate.
