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How do you budget during a recession?
Is it time to double down on a restrictive budget? But you know, it simply has never worked for you.
Well, it’s time to readjust your budget in a way that works for you, instead of being restrictive. It is not normal times right now, we are talking about a recession!
And I get it, no one wants a recession. The word alone brings up so much anxiety due to: layoffs, rising prices, and your paycheck isn’t stretching the way it used to.
This is why a recession could actually be the wake-up call your budget has been needing, away from restriction.
I know, bold statement. But hear me out.
Recessions force us to pause and reflect. To ask hard questions. Finally, we need to look at our money with honesty instead of shame. Most importantly, you should stop budgeting the way you were taught: hustle, grind, and deprive yourself of your way to financial stability.
That mindset does not work for first-gen, eldest daughters, and women of color because we’ve already been surviving, not thriving.
So let’s talk about what actually changes during a recession, and how you can make this moment a turning point.
1. Recessions expose what’s not working in your money habits
When the economy feels uncertain, you will notice that you will rethink every decision you make with your money. That $6 coffee you used to get every morning? You might start thinking twice before purchasing. The economy all of a sudden reminds you that it doesn’t feel safe to spend anymore, and you should be more careful.
And, although, I do not like the scarcity mindset during uncertain times, it definitely is a time to reflect on this discomfort.
What does this say about your money habits, and where do you stand financially?
Take this time to assess your finances. Take a closer look at your spending and decide if it’s still aligned with your values. Maybe you’ve been budgeting in a way that feels restrictive, and you want to plan for fun a little more to ensure you are not accruing debt. Maybe you’ve been so focused on just paying the bills that you’ve never taken the time to ask, “What do I actually want my money to do for me?” And, how much do you have in your emergency fund?
A recession forces us to stop. Reflect. Rethink.
Ideally you review your finances before a recession hits, so that you are ready and there wont need to panic. So, what can you do today to prepare for a possible recession?
2. Your budget should not feel restrictive, include FUN!
Creating a budget that is restrictive is often rooted in control, guilt, and shame. It is teaching you to cut, cut, cut, to squeeze every dollar until you feel like you’re suffocating. It is telling you to sacrifice now and maybe, just maybe, enjoy life later.
But for many of us, especially if we’ve already grown up in survival mode, that kind of budgeting just retraumatizes us even more. It doesn’t empower us. In fact, it makes us wonder, when will it ever be OUR turn to enjoy the little things in life.
A restrictive budget doesn’t teach you how to trust yourself with money. It just teaches you how to fear it, even more.
Recessions allow you to reflect. Is this how you want to keep living?
If budgeting feels like a punishment, it’s not going to stick. So, do me a favor and start adding fun to your budget! Allow yourself to spend guilt-free! And guess what? You will still be paying all your bills, paying off debt, saving money, and have enough to spend guilt-free. But the trick is to add a line to your budget and call it FUN. There is no way you will go into debt or miss a payment, because you planned every dollar you earned before you even received it!
3. Build a budget around your real life, not just numbers
Budgeting isn’t just about math or your numbers. If that is your focus, then your budget will never work, and you will be wondering why it works for everyone else except for you. You need to start budgeting, having your emotions, energy, and the life you’re trying to build in mind.
During a recession, your priorities might shift. Maybe you’re more focused on building your emergency fund. Maybe you want to start cooking more at home, not just to save money, but because it feels grounding. Maybe you decide to cancel that subscription, not because it’s $25/month, but because it no longer brings you joy.
This is what I mean by being aligned with your spending and budgeting in a way that you consider your emotions and energy. It’s time to give your money direction based on your values, not just what the internet says you should be doing.
During a recession, you tend to spend money more cautiously out of fear. But the truth is, you need to always be mindful of your spending, not from fear, but from alignment with the life you’re intentionally building. That kind of budgeting feels expansive, not restrictive.
Here are 13 budget categories to include in your budget.
4. A recession is your chance to create financial habits that actually stick
Let me be clear that I’m not romanticizing financial struggle. But I am saying that moments of discomfort can push us to finally create change that actually sticks. And, if you build these habits before a recession, even better! Why? Because you will be able to whether the financial crisis without blinking an eye.
Now, if you’ve been meaning to:
- Finally, track your spending
- Start meal prepping
- Set up an emergency fund
- Build sinking funds for birthdays, travel, or car maintenance
… This is the push you needed.
To start making change, but not from a place of panic. From a place of excitement for the future you are building.
A recession is a reminder that the economy will always be unstable. Financial crises always happen every few years. But you can control how stable you feel in the middle of it. And you can start by creating sustainable, realistic, and healthy financial habits.
Here are 7 reasons you are still living paycheck to paycheck in your 30s.
Take note of those reasons to help you break free from the paycheck to paycheck cycle during a recession.
5. Normalize budgeting for joy, not just survival
If you are asking yourself: How do I budget during a recession?
This recession is the moment you stop just budgeting to survive and start budgeting to live!
It is time to start including joy in your budget, rest, and fun, where you don’t feel bad for the things that light you up. Where your spending is aligned with your values, not dictated by guilt.
This is so necessary so that your budgeting efforts stick because a restrictive approach isn’t working anymore.
You might want to read: Why fun money is non-negotiable for financial success.
6. Your money gets to feel empowering even in a recession
You are allowed to build wealth while choosing joy. You are allowed to take slow mornings, buy the organic groceries, and dream about a future that doesn’t involve just surviving.
Here are mind-blowing ways to create a rich life without more money.
You can do all of this even during a recession, especially when you build a budget that reflects who you really are. In fact, the more you budget for fun, the faster you are able to reach your savings goals. When you are empowered, you are more likely to stick to your financial goals and avoid accruing debt.
A recession can feel heavy. But it can also be a reset. An invitation to come home to yourself. A chance to make sure your budget reflects the bold, confident, unapologetic woman you are becoming in this season of your life.
I want to offer you the opportunity to think about this recession as not just the economy falling apart, but also your permission to finally put it all back together in a way that actually works for you!
Let this be the wake-up call you needed, not to panic, but to pause. To shift. Do not fear the recession but let it empower you to transform your finances for the better!
Here are more recession tips you might find helpful:
