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5 Money Moves You Can’t Afford to Stop Making

Cutting these corners can hurt you in the long run

spinner image Cartoon of a man sitting on a tree branch but chopping at the wrong end of it with an ax. Self-sabotage concept.
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Cutting corners is the new mantra for countless households as the nation wrestles with high inflation, rising interest rates and growing layoffs. But even though the urge to save makes sense, chopping in the wrong places can cause more harm than good. That’s particularly true if a recession is short-lived and inflation comes back down to more normal levels soon. You could end up making short-term moves at the expense of your long-term financial goals.

“Yes, you need to start looking for places to cut, assuming your expenses have gone up, your income has gone down or both,” says Anne Lester, a retirement expert. “But rather than starting with the things you can afford to cut, think about what you have to keep doing.”​

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From saving for emergencies to spending on health care, here are five money moves you can’t afford to stop making, even in a recession. ​

1. Emergency savings

When budgets are tight, saving for emergencies tends to fall by the wayside. Money experts caution against draining these funds. Without any money in the bank, you may be forced in an emergency to rely on a high-interest credit card or take out an expensive loan, which could put you in a deeper hole down the road. “You want to make sure you’re always putting money into emergency savings, if possible,” says Chris Briscoe, a certified financial planner and vice president and director of financial planning at Girard. “Whether it’s $10, $20 or $30, you want to put away something to keep the good habit.”​

2. Insurance

Insurance gives you more than peace of mind; it protects you if something catastrophic occurs to your health, home or vehicle. Avoid the temptation to stop paying your health insurance premiums or skimp on your automobile or home insurance coverage. It can have very bad long-term consequences if something goes wrong. “Insurance is something critically important to maintain,” says Lester. “You want to maintain it to avoid something that can wipe you out financially.” If you do need to save, don’t cancel your coverage. Instead, consider shopping around for more affordable plans, increasing your deductible or reducing your coverage. ​

3. Healthy eating

At last check, food prices were up 10.4 percent year over year, according to the Bureau of Labor Statistics, so it is not surprising that rising grocery bills are a worry. While you may not be able to afford buying all organic groceries, you also don’t want to start eating a lot more processed food because it’s cheaper. That could have long-term negative impacts on your health, energy, ability to function and mood. “It’s very common for people to change their eating habits for the worse because of inflation,” says Christopher Manske, a certified financial planner and president of Manske Wealth Management in Houston. “Just because eggs are more expensive doesn’t mean our bodies now require different levels of protein and nutrition. We still need to treat our bodies well.” ​

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In this environment it may be tough to save on healthy foods, but there are some strategies you can employ. Buying supermarket staples when they are on sale, purchasing products you consume a lot of in bulk and using store coupons are all ways to save money on your groceries. ​

4. Rent/Mortgage

It may seem like a good idea to skip a mortgage or rent payment when money gets tight. It likely is, after all, your single biggest monthly bill. But the impact can be devastating over the long term. Not only will interest accrue on missed payments, not to mention other fees and penalties, but if you keep missing payments you run the risk of eviction or foreclosure. The fallout from an eviction or foreclosure can haunt your credit report for years and damage your credit score, making it more costly to borrow money in the future and even excluding you from getting a job or securing new housing. “Destroying your credit rating is not good long-term financial planning,” says Lester. ​

5. Professional development

Many careers require professional development, be it classes, certifications or other training, to advance and/or stay fresh. When money is tight, curbing spending in this area could seem like a logical move, particularly if you are already working. But forgoing that professional development may hurt your long-term earning potential. “It’s really hard to recover,” says Manske. “What happens is [you] are no longer maintaining forward motion. You can’t catch that back up.” If there’s a choice between cutting professional development or entertainment, Manske says go with the latter. You can forgo Netflix or dining out if it means you’ll make more money or be more satisfied with your job in the long run.

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