During the pandemic, Black women were more likely to be locked out of the labor force than other demographic groups. Now, that we are finally returning to work, right in the midst a recession — an uncertain time for the economy.
Women are returning to the labor force in droves, with 397,000 more women looking for a job in May, according to the latest jobs report from the U.S. Bureau of Labor Statistics, released Friday. This has pushed women’s labor force participation rate to 58.3%, only one percentage point lower than before the pandemic, according to the National Women’s Law Center.
Black women led the return to the workforce, as their participation rate is even higher than before the pandemic. Unemployment among Black men and women is slightly higher than last month, so it doesn’t mean that more Black Americans have found jobs yet, but it does mean that more are actively looking for one right now.
That fact that Black women are actively looking to rejoin the workforce is evidence that the gender and racial employment gap that emerged during the pandemic—when many women and Black Americans left the workforce entirely—is starting to close. But with a recession seemingly looming on the horizon, this might prove to be a potentially challenging time.
Is a recession coming? It’s possible … and scary. Everyone is wondering what will happen. Especially with inflation, gas prices, and home values going crazy. Having an emergency fund, strong credit, multiple sources of income, and living within your means will give you a leg up.
Have Multiple Streams of Income
When you have multiple streams of income, you aren’t relying on one single source for your money. If you were to lose your job or if one source isn’t generating enough, you have other income flowing in to prevent financial problems, which is important in a recession.
There are three ways to earn multiple sources of income, and they are active income, passive income, and portfolio income. Each one takes different amounts of effort.
Examples of active income
Specific examples of active income include your paycheck, commissions, bonuses, and tips. You can increase your income through active income streams in the following ways:
- Getting a better paying job in exchange for your time and skill
- Getting a part-time job in addition to your full-time job
- Starting a side hustle or full-fledged business
- Increasing the prices you charge in exchange for your time and services if you are a business owner
Examples of passive income
More types of passive income include royalties, interest income paid on bank account balances, network marketing, affiliate marketing income, and other types of business income.
- Putting in the initial groundwork to add a passive income element to your business. For instance, an eCourse or automatically delivered service or product, e.g., a book on Amazon. Something that does not require you to be involved after setting it up.
- Become an affiliate for a product or service that you share with your network or audience base. Still, a 3rd party provides the service delivery, and you simply earn money for your referrals.
- Investing in rental real estate and charging rents that not only cover your expenses but net you a profit.
- Peer-to-peer lending (P2P) where you earn interest on the money you loan to others.
Examples of portfolio income
Portfolio income is income that you earn from your investments. For instance, the money you earn from selling stocks in your stock portfolio at a profit is considered portfolio income.
More specific examples of portfolio income include interest, capital gains, dividends, and royalties.
Live Within Your Means
To “live within your means” simply means to spend less on your lifestyle than you generate in earnings. This advice is even more important in a recession. If you want to live within your means, you have to know what your means are. You need to know the net income that appears on your paychecks — the amount you actually have to spend.
You also need to know how often you get paid so you can better match the timing of your income with your bills. Since most of your bills are paid monthly, you’ll need to know how much you get paid every month. Once you know how much you make, you can focus on reducing your spending to fit your income. If you don’t have one already, create a budget to plan your expenses and use it to keep your spending on track. If you’ve already tried budgeting and it didn’t work, try it again. Often you just need to make some minor changes to your budget to get it to be effective.
Get Cash Back when you Shop Online
Shopping online has its perks. It’s super convenient, but it can be time consuming to find the best deals. Instead of hunting for coupon codes (that don’t always work!) and opening tons of browser tabs comparing prices, you can try apps like Rakuten, that allows you to get cash back for shopping.
Get paid for shopping at all your
favorite stores, like amazon, target, Walmart, Macy’s, Nike, Kohls, Sams Club, even, airlines, hotels and car rentals.
Sound too good to be true? Here’s the deal: Stores pay these sites a commission for sending you their way. They share that with you as cash back. Everyone wins! Tuck you cash back away.
Create an Emergency Fund Now!
Set yourself up for success from the start. Rather than shooting for three months’ worth of expenses right away, shoot for one month. Or two weeks. Whatever it takes to make your first goal seem doable.
Reaching that first goal can give you the motivation to keep going. Set your second goal higher — and the third even higher. By then, saving will have become a habit, and the positive motivation you’re building by reaching the smaller goals will help propel you toward larger ones.
Set your initial contribution level at a relatively small amount. That will ensure you don’t stress your cash flow, making it too easy for you to rationalize abandoning your savings routine. Find something in your life you can live without, or with less — trim back the monthly coffee habit a bit. Pass on that new pair of shoes, or one big night out. Choose that amount — whether it’s $5 or $100 — and commit to saving it at regular intervals: per month, per week, or per paycheck. The key is that it needs to become a habit, not a recurring struggle.
Set up a separate account just for your emergency fund and have your chosen contribution amount deposited automatically, either by your employer or your bank.
Pay no interest until January 2024
The Fed is likely to raise interest rates again. It means it is a crucial time to lock in a long zero percent introductory annual percentage rate (APR). The good news is that credit card issuers are offering extremely long intro APRs in order to stand out from their competitors and win your business. If you have good to excellent credit (usually considered a score of 670–850) and you would like to avoid interest charges, are planning a large purchase, or would like to save money by transferring your balance from another credit card, then one of the cards below will surely suit your needs. In most cases, a zero percent APR is a promotional interest rate that lets you borrow money at no cost for a fixed period, often between 12 and 21 months. During this time, you still need to make at least the minimum payment each billing cycle, but you won’t accrue any interest costs — a good arsenal to have when recession hits.
Strengthen your Credit Score
Your credit score is one of the most important measures of your financial health, and will help you weather a recession. It tells lenders at a glance how responsibly you use credit. The better your score, the easier you will find it to be approved for new loans or new lines of credit. A higher credit score can also open the door to the lowest available interest rates when you borrow, especially during times of financial hardships. BLAC provides tips on How to Build your Credit Score.
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