Prepare savings accounts for a recession

Monday September 22, 2008

Australian finance experts have been warning for some time now that Australia may be headed for a recession. While there hasn't been any confirmation yet, you may want to start preparing your finance now, just in case. By using your savings accounts carefully, you may be able to protect yourself and live comfortably if a recession hits Australia.

A recession is a considerable decline in country's economic growth for two or more successive quarters within a year. An extensive recession may result in a depression. A recession can result in increased bankruptcies, job losses, lower amounts of money loaned from banks, stock market crashes, deflation, and lower incomes.

It is advisable to be prepared with your money in case of a recession. Your 'rainy day' money may become useful during this period. You can do this by opening a savings account and putting money away on a regular basis.

When looking for a savings account, look for:

• High interest savings accounts can earn more money.
• Low annual fees can help you to avoid losing money.
• Easy access.

Online savings accounts are beneficial as they allow you to manage your savings account and will often have high interest rates and low annual fees.

Try to manage your savings account by:

• Saving about six months worth of expenses or wages in the savings account to help you through any hard times.
• Place any unexpected money into your savings account. This could include tax returns, work bonuses, or inheritance money.
• Look over your budget and see if there are any areas you can cut down on to put extra money into your savings account.
• Live within your means. Small sacrifices now could benefit you in the future.
• Avoid creating debt for yourself during your saving period. Try not to use credit cards and pay off as much of any loans you have as quickly as possible.

Even if Australia doesn't end up having a recession, it could be a good idea to place money into your savings account anyway for any hard financial times you may experience in the future.

If you want to protect yourself from a potential recession, compare and apply for a savings account now and start saving today.

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