During a recession, there are plenty of things everyone can do to help boost the economy.
Since most of the conversation about recessions tends to focus on what governments or big businesses can do to help the economy, it can be easy to feel like you have no way to help your community. While there will be things out of your control, that doesn’t mean there’s nothing you can do.
What You Can Do
Support Local Businesses. Local businesses are often the hardest hit in recessions. With generally smaller profit margins than bigger businesses, they’re also often closer to closing their doors. When small businesses close, it creates a ripple effect. The people that they employed no longer have jobs and are less likely to spend money, which can make more small businesses close. It’s vital to do what you can to support business owners in your community in order to boost your local economy. If you can afford to, consider buying from the mom and pop shop on the corner or getting takeout from a local restaurant.
Follow Advice From Local and National Leaders. Every recession is different. Local and national leaders are advised by experts and can pass along guidelines or rules to help bolster the economy. If you’ve been encouraged to spend in a certain area or do a certain thing, it’s often wise to do so if you are able. Even if you may not see the benefit or need immediately in your life, large amounts of people following these rules throughout a county, state, or country, can make a difference.
What to Avoid
“Runs” on Banks or Credit Unions. While the phrasing may bring to mind overcoat clad masses angrily clamoring outside the windows, runs on banks and credit unions can still happen today. Essentially, “running” on a bank or credit union means multiple people withdrawing all of their money in cash. Banks and credit unions need physical money to continue operations, and if everyone demands their money in cash at once, banks and credit unions simply can’t support it.
Most importantly, your money is safe in a financial institution. Most banks and credit unions are insured by either the FDIC (Federal Deposit Insurance Corp) or NCUA (National Credit Union Administration). These organizations will cover your savings, checking, and many other accounts for up to $250,000 per account ownership type and bank. This means that your money is safe. Even if the worst happens and your bank or credit union is forced to close, the government has insured your money and you will not lose it.
Contributing to Shortages. You may need to stock up on necessities when the economy begins to fall, but you should do so wisely. Money can be tight in a recession and you want to be sure that you’re spending your money in areas that will be most helpful. If you spend a significant chunk of your budget on soap, for example, you won’t have nearly as much left over for other essentials like food or medicine.
Similarly, it’s important to think of others. When 100 people buy a loaf of bread, that’s not a big deal. When a few people buy 100 loaves of bread each, suddenly there’s no bread left. If this happens with multiple important items throughout an entire store, it can lead to panic and shortages of necessary supplies. People need access to food, sanitary supplies, medication, water, and many other things in a recession, just like they do when the economy is thriving. When someone buys more than their fair share faster than stores can resupply, it means that many have to go without. We can all do our part to think of others and ensure that everyone has what they need to get through a tough time.
Recessions are hard on everyone, but there are actions that we can all take to help make them easier. Being conscious of the effects of your actions in the midst of an economic downturn can help you be an active part of improving the situation.
COVID-19 Shutdowns, Social Distancing, and the Economy
Many local governments are trying to navigate the economic impact of the COVID-19 pandemic. With residents staying home, local businesses have been severely impacted. To help businesses in your community, go online to see if a favorite small business has online shopping available or purchase a gift card to use later. To support local restaurants, order pickup or delivery even if dine-in services aren’t available. You can support the overall health of your community while still making a positive economic impact.
While we hope you find this content useful, it is only intended to serve as a starting point. Your next step is to speak with a qualified banker who can provide advice tailored to your individual circumstances. Nothing in this article, nor in any associated resources, should be construed as financial, tax or legal advice. Furthermore, while we have made good faith efforts to ensure that the information presented was correct as of the date the content was prepared, we are unable to guarantee that it remains accurate today.