Money Management

Economic conditions could potentially worsen in 2024. Read on for ways to protect yourself in that unwanted scenario. 

Last year, many economists were quick to warn consumers of a 2023 recession. But thankfully, we’ve made it to the final stretch of the year without experiencing a broad economic decline.

Things might very well hold steady in 2024, too. If inflation continues to cool and the Federal Reserve can start cutting interest rates, consumers may find that borrowing becomes more accessible. That could lead to a stronger economy, not a weaker one.

But the reality is that a recession is the sort of thing you should always have on your radar. You never know when the economy might take a sudden turn for the worse.

The good news is that there are steps you can take to prepare for a recession. Here are a few worth concentrating on in the coming weeks and months.

1. Build an emergency fund

The scary thing about a recession is that it can lead to widespread layoffs. Losing your paycheck could mean struggling to pay your bills.

That’s why it’s so important to have a solid emergency fund at all times. Ideally, you should try to aim to have enough money in your savings account to cover three months of essential expenses — such as rent, car payments, utilities, and food.

If you have some savings now, but not enough to pay for three months of essentials, start socking more money away as soon as you can. That could mean sticking cash gifts you receive for the holidays into the bank instead of spending that money.

Recent data from SecureSave shows that 63% of Americans do not have the cash reserves to cover an unplanned $500 expense. If you’re in a similar boat, it likely means you couldn’t come close to covering three months of essential bills in the event of a layoff. And that’s not a position you want to stay in.

2. Make sure your investment portfolio is diversified

You may have a portfolio of stocks being held in a brokerage account. Investing money you don’t need for near-term bills is a smart way to grow it into a larger sum over time.

But while recessions don’t always batter the stock market, they certainly can. And so it’s important to make sure your portfolio is recession-ready.

Take a look at your investments and make sure you own stocks across a range of industries. If you own too many similar stocks, you could end up looking at steeper losses in the event of a stock market decline.

So let’s say you review your portfolio and find that you’re mostly invested in tech stocks. You may want to rebalance by selling some of those stocks while they’re up and buying other types of stocks instead, like energy stocks, auto stocks, and healthcare stocks. Or, you could replace some tech stocks with broad market ETFs, or exchange-traded funds.

3. Diversify your income

Just as you don’t want to put all of your eggs into the same basket when it comes to the stocks you hold, so too might you want to branch out when it comes to earning money. If a recession hits, your job could end up on the chopping block. If you have the time to pick up a side hustle, doing so is a great way to diversify your income. If you were to lose your main job, you’d have a second source of income to fall back on and potentially ramp up on.

Even if a side hustle isn’t possible for you (say, you’re too busy between work and household obligations), at least try to make a point to build some new job skills in the coming months. The more knowledge you bring to the table, the easier it might be to find a new job if a recession wipes out your current one.

There’s no reason to spend time panicking about a 2024 recession. The economy is strong right now, and no data is pointing to a near-term decline. But it’s important to recognize that the threat of a recession always exists. And if you make these moves, you can put yourself in a better position to get through one unharmed.

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Traveling for the holidays this year? You don’t have to spend a fortune. Read on to learn more. 

The holidays are typically a popular time of the year to travel. And this season is shaping up to be no exception.

A good 84% of Americans plan to travel for the holidays this year, says the New York Post. But if you’re expecting to visit family or friends this December, you may be in for quite the hefty credit card tab — unless, of course, you make these strategic moves.

1. Fly at off-peak times

Christmas falls on a Monday this year, which means a lot of people will no doubt be looking to head to their destinations on Friday, Dec. 22 and return on Tuesday, Dec. 26. If you have similar plans, you could end up spending a small fortune. So instead, try to be flexible — especially if your job is remote and you can therefore do it from anywhere with an internet connection.

One thing you may want to do if you’re traveling for Christmas is fly out as early as Dec. 19 or 20 if you can swing it. And then, rather than return on the 26th, go home on the 27th.

Even if you don’t work remotely, a lot of companies see a slowdown the week between Christmas and New Year’s. Your boss might agree to let you log on from another location that week, which gives you more flexibility for flying home.

Of course, this strategy assumes you’re staying with family or friends and aren’t paying for lodging. If you are, then what you save on a flight, you might spend on a hotel room — so keep that in mind.

2. Book with the right credit card

Flying can be an expensive endeavor during the holidays. But if you use the right credit card, you can potentially save money on some of the peripheral costs you might encounter — things like checked baggage fees and in-flight purchases.

Many travel reward credit cards give you a free checked bag per flight and discounts on food you buy while in the air. Your credit card might also give you access to an airport lounge so you can fuel up before your flight and avoid having to purchase food during it.

3. Hitch a ride instead of flying or driving yourself

Driving can be more affordable than flying. But that’s not necessarily the case if you’re traveling solo. When you consider the cost of gas and your time, you may find that it’s just as expensive to drive several hundred miles as it is to fly. That’s why you may want to consider booking a ride to your destination instead.

Services like Hitch, for example, allow you to book a ride in another driver’s vehicle and pay your share. It makes sense to compare the cost there to the cost of driving alone, especially if you’ll have access to a vehicle at your destination (say, if you’re visiting your parents and can use one of their cars during your stay).

While getting in a car with a stranger might seem unsettling, rest assured that Hitch screens its drivers carefully. You might actually end up making some new friends during your journey.

Holiday travel doesn’t automatically have to break the bank. Use these tips to lower your costs so you can spend time with the people you love with less stress.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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Donating your vehicle is a viable alternative to selling it. Learn more about the benefits of donating your vehicle. 

You and your car had a good run. But now it’s time to move on. You might be thinking about resale value and lining up a buyer, and that’s certainly one way to go. It’s not your only option, though.

Donating cars is becoming an increasingly popular way to get rid of old vehicles and do some good in the process. Here are five reasons you may want to consider it.

1. You’ll be helping a great cause

Donating to charity — whether you give money, time, goods, or a vehicle — can help further that charity’s cause and help those in need. If you’d like to give but don’t have much money to spare, you might consider donating your vehicle instead. Some charities use them to transport goods and members, while others sell them and use the proceeds to fund their mission.

Just make sure you choose a qualified tax-exempt organization to donate to. You may already have one in mind. Otherwise, look into what charities are operating in your area and inquire whether any of them could benefit from a vehicle donation.

2. You’ll get a tax break

You can qualify for a charitable donation deduction on your taxes if you donate your vehicle. But you must itemize your deductions to do this.

If the charity holds onto the vehicle, your deduction would be the fair market value of the vehicle. But if the charity sells the vehicle, your deduction is the lesser of the fair market value or the proceeds from the sale. However, if the proceeds are less than $500, then your deduction is the lesser of $500 or the fair market value for the vehicle.

If you’re not sure how donating your vehicle will affect your taxes, you may want to consult a tax professional before doing so. They will also be able to advise you on what types of documents you need to prove you’ve donated the car.

3. You could save yourself a lot of money

Donating your vehicle could save you money if you don’t plan to replace it with a new vehicle. You’ll eliminate auto insurance payments, maintenance and gas costs, and yearly registration fees from your budget. That could potentially save you thousands of dollars per year.

Of course, it could make life more difficult for you in other ways. You may need to pay to rent a car or pay for public transportation in its place. But these costs will likely be far lower than what you’d pay to maintain and keep car insurance on a vehicle you own.

4. You’ll save yourself the hassle of selling

Selling a vehicle means haggling over prices, test drives, and getting offers from competing buyers. It can be stressful, especially for vehicles that aren’t in perfect, working order. And it can be downright impossible for those who have misplaced the title to their vehicle.

Donating your car can make things a lot easier. All you have to do is find a charity that wants the car and sign some paperwork. They’ll take it off your hands so you don’t have to worry about disposal either.

5. You could help the environment

If the charity donates your car to a company that scraps or recycles vehicles, you could be giving your car a new lease on life. These companies take parts from the vehicle, like the steel used to make the frame, and recycle it to put into new vehicles or other products. This is much kinder for the environment than producing brand-new steel.

Donating a vehicle may not be the right move for everyone. But it’s an option worth weighing if you don’t want to deal with the hassle of a sale or are concerned about getting a fair price. Weigh all of your options before you decide which is right for you.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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