6 things you don't need to buy during a recession (2024)

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  • During an economic downturn, it's crucial to control your spending.
  • Try to avoid taking on new debt you don't need, like a house or car.
  • Look critically at smaller expenses, too — there's no reason to keep paying for things you don't use.

6 things you don't need to buy during a recession (1)

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6 things you don't need to buy during a recession (3)

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With a looming recession and the Federal Reserve set to raise interest rates again, it's important to pay attention to your spending. A recession can be a major disruption to your personal finances. Preparing your finances, setting up a budget, and keeping spending to a minimum can help you weather an economic downturn.

According to financial group BMO's latest Real Financial Progress Index, 84% of consumers said they are concerned about a recession happening before the end of the year and 76% said they were making lifestyle changes in preparation for the downturn.

The No. 1 financial adjustment is delaying major purchases such as a house or a car, followed by paying down debt and planning to cut back on holiday spending.

Given this financial uncertainty, there are several purchases that you may want to avoid depending on your circ*mstances and lifestyle needs. From new houses and cars to Hulu and other subscription services, here are purchases to think twice about during a recession.

1. A new house

Houses tend to get cheaper during a recession due to falling demand. People tend to be wary of making this big purchase during uncertain economic times, so prices fall to entice buyers. Although you typically need a job and financial security to buy a home, it does not make a purchase of this magnitude recession-proof.

This also applies to refinancing a mortgage. It may be tempting to use cash-out refinancing to pay down debts, but if you are in a financial bind or are facing job insecurity, you may not want to increase housing costs at this time.

2. A new car

A shiny, new car at recession prices might seem like a good idea, but it's just a shiny, new monthly bill. You might not want to commit to a car payment or deplete cash you may need down the road during a time of financial uncertainty.

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A new car can be a higher expense all-around, from the car payment to taxes and insurance. If your current car is still working, consider keeping it a while longer and ditch the new car payment.

3. Excess groceries

A lot of consumers impulse buy at the grocery store, but during a recession when you need to control your spending, it's important to grocery shop with a plan. Plan your meals, look for recipes, and shop accordingly. Stocking up without forethought turns into buying too much, and the groceries and your money just go to waste.

4. Any item that requires financing

Houses and cars are the first things that come to mind, but there are plenty of other large purchases —home renovations, furniture, computers and TVs — that many would not be able to afford without financing. Now is not the time to do it unless it is absolutely necessary.

There will be deals and sales, but now may not be the time to commit to ongoing payments or reduce your cash reserves. As stores want to get more customers in, there will be opportunities for low-cost financing and lower prices, but cash in the bank during a recession is better than any deal.

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5. Additional TV streaming

Turning your attention to a TV show can be relaxing during a hard time, but getting a grip on your spending is crucial right now.

When money is tight or you want to make sure you have cash on hand in case you need it, consider whether you want to have cable TV and streaming subscriptions to Hulu, Netflix, AppleTV+ and Amazon. This can be a money drain that you may not even be aware of. Decide which streaming services you want to watch and if you can, have one, maybe two at the most.

6. Memberships, meal delivery, and subscriptions

Take a look at where your money is going on a monthly basis and figure out what you are paying for, but might not need.

One of the biggest wastes of money is unnecessary memberships and subscriptions. A lot of these are automatically deducted from your account, so they quietly take your money and you don't see it. Take a look at your bank statements and see what memberships you are paying for on a regular basis and remove the ones that are not essential.

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That subscription box or meal delivery service you keep forgetting to cancel or that magazine that just ends up in the living room unread? Think about whether this is working for you financially, and if not, cancel it and take it out of your budget.

During a recession, it's important to pay attention to spending and be wary of making unnecessary and expensive purchases. In the midst of a significant economic downturn, the best steps to take are creating a budget, getting rid of needless expenses, and growing a cash reserve.

Jennifer Streaks

Senior Personal Finance Reporter and Spokesperson

Jennifer is a Senior Personal Finance Reporter and Spokesperson for the Personal Finance vertical at Business Insider. She started her career covering personal finance at Black Enterprise Magazine, went on to CNBC where she covered personal finance, women and money and tech and then Forbes, where she reported on personal finance, business, tech and money matters related to the economy, investing, credit and entrepreneurship. Jennifer is also the author of Thrive!...Affordably: Your Month to Month Guide to living your Best Life without breaking the bank. The book offers advice, tips and financial management lessons geared towards helping the reader highlight strengths, identify missteps and take control of their finances. In addition, she has extensive experience as an on-air financial commentator and has been a featured expert discussing credit and savings, investing and retirement, mortgages and all things money and personal finance. She has an ability to discuss and simplify complex financial issues and make them easier to understand. Follow her on Twitter @jstreaks.

6 things you don't need to buy during a recession (2024)

FAQs

What not to buy during a recession? ›

Most stocks and high-yield bonds tend to lose value in a recession, while lower-risk assets—such as gold and U.S. Treasuries—tend to appreciate. Within the stock market, shares of large companies with solid cash flows and dividends tend to outperform in downturns.

What can I buy to make money in a recession? ›

5 Things to Invest in When a Recession Hits
  • Seek Out Core Sector Stocks. During a recession, you might be inclined to give up on stocks, but experts say it's best not to flee equities completely. ...
  • Focus on Reliable Dividend Stocks. ...
  • Consider Buying Real Estate. ...
  • Purchase Precious Metal Investments. ...
  • “Invest” in Yourself.
Dec 9, 2023

Should I take my money out of the bank before a recession? ›

Your money is safe in a bank, even during an economic decline like a recession. Up to $250,000 per depositor, per account ownership category, is protected by the FDIC or NCUA at a federally insured financial institution.

What are five money saving tips to survive a recession? ›

Consider these five preemptive strategies that may help protect your finances in a recession.
  • Revisit your budget. Keeping close tabs on your budget is a cornerstone of good financial health, especially when inflation is high. ...
  • Pad your emergency savings. ...
  • Tackle debt. ...
  • Consider staying invested. ...
  • Maintain focus on your goals.

What do people buy most of in a recession? ›

Toothpaste, deodorant, shampoo, toilet paper, and other grooming and personal care items are always in demand. Offering these types of items can position your business as a vital resource for consumers during tough times. People want to look good, even when times are tough.

Should you keep cash at home during a recession? ›

During economic downturns you want to have as much cash on hand as possible. If it is not absolutely necessary, it may be best to delay any big-ticket purchases. Big purchases, such as a car or house, typically require you to either put down a large lump sum of cash or have a hefty ongoing payment.

Is Cash King during a recession? ›

For investors, “cash is king during a recession” sums up the advantages of keeping liquid assets on hand when the economy turns south. From weathering rough markets to going all-in on discounted investments, investors can leverage cash to improve their financial positions.

Where is your money safest during a recession? ›

Where to put money during a recession. Putting money in savings accounts, money market accounts, and CDs keeps your money safe in an FDIC-insured bank account (or NCUA-insured credit union account). Alternatively, invest in the stock market with a broker.

What will be valuable if the economy collapses? ›

A physical asset that appreciates will always be valuable in a stock market crash. The most valuable assets in this situation include items like artwork, cars, jewelry, and other collectibles. Physical gold is another valuable asset that can be used as a safe haven in times of economic turmoil.

Can banks seize your money if economy fails? ›

The short answer is no. Banks cannot take your money without your permission, at least not legally. The Federal Deposit Insurance Corporation (FDIC) insures deposits up to $250,000 per account holder, per bank. If the bank fails, you will return your money to the insured limit.

Is it better to have cash or money in bank during recession? ›

Generally, money kept in a bank account is safe—even during a recession. However, depending on factors such as your balance amount and the type of account, your money might not be completely protected. For instance, Silicon Valley Bank likely had billions of dollars in uninsured deposits at the time of its collapse.

Where is the safest place to keep cash at home? ›

Where to safely keep cash at home. Just like any other piece of paper, cash can get lost, wet or burned. Consider buying a fireproof and waterproof safe for your home. It's also useful for storing other valuables in your home such as jewelry and important personal documents.

How to be frugal during a recession? ›

Some quick tips to help you save during a recession include:
  1. Pay down your debt fast. ...
  2. Make meals at home. ...
  3. Cut unnecessary bills like subscription plans, apps, or activities you're not using.
  4. Check the national average savings account APY against what you are using at your local bank.
Jul 28, 2023

How to make big money during recession? ›

Many investors turn to stocks in companies that sell consumer staples like health care, food and beverages, and personal hygiene products. These businesses typically remain profitable during recessions and their share prices tend to better resist stock market sell-offs.

What to do financially before a recession? ›

How to prepare yourself for a recession
  1. Reassess your budget every month. ...
  2. Contribute more toward your emergency fund. ...
  3. Focus on paying off high-interest debt accounts. ...
  4. Keep up with your usual contributions. ...
  5. Evaluate your investment choices. ...
  6. Build up skills on your resume. ...
  7. Brainstorm innovative ways to make extra cash.
Feb 22, 2024

What is the best thing to do with money in a recession? ›

Where is your money safest during a recession? Many investors turn to conservative asset classes such as bonds during recessionary periods. Mutual funds may also be a useful area to consider, and so may established, large-cap companies with strong balance sheets and cash flow.

Is cash King during a recession? ›

For investors, “cash is king during a recession” sums up the advantages of keeping liquid assets on hand when the economy turns south. From weathering rough markets to going all-in on discounted investments, investors can leverage cash to improve their financial positions.

How do you not lose money in a recession? ›

Build up your emergency fund, pay off your high interest debt, do what you can to live within your means, diversify your investments, invest for the long term, be honest with yourself about your risk tolerance, and keep an eye on your credit score.

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