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

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.

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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.

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

6 things you don't need to buy during a recession? ›

Don't: Take On High-Interest Debt

It's best to avoid racking up high-interest debt during a recession. In fact, the smart move is to slash high-interest debt so you've got more cash on hand. Chances are your highest-interest debt is credit card debt.

What not to buy during a recession? ›

Don't: Take On High-Interest Debt

It's best to avoid racking up high-interest debt during a recession. In fact, the smart move is to slash high-interest debt so you've got more cash on hand. Chances are your highest-interest debt is credit card debt.

What gets cheap during a recession? ›

Because a decline in disposable income affects prices, the prices of essentials, such as food and utilities, often stay the same. In contrast, things considered to be wants instead of needs, such as travel and entertainment, may be more likely to get cheaper.

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.

What is worth money in a recession? ›

Defensive sector stocks hail from industries that tend to remain stable or perform well during economic downturns. For example, health care, utilities and consumer staples typically hold up better than other sectors during a recession.

Who suffers the most during a recession? ›

We find that the impacts of the Great Recession are not uniform across demographic groups and have been felt most strongly for men, black and Hispanic workers, youth, and low-education workers.

Should you stock up on food during a recession? ›

All Americans should have at least a three-day supply of food and water stored in their homes, with at least one gallon of water per person per day. If you have the space, experts recommend a week's supply of food and water. Choose foods that don't require refrigeration and are not high in salt.

Where is money safest during a recession? ›

You can keep money in a bank account during a recession and it will be safe through FDIC and NCUA deposit insurance. Up to $250,000 is secure in individual bank accounts and $500,000 is safe in joint bank accounts.

Is it better to have cash or property in a recession? ›

Cash: Offers liquidity, allowing you to cover expenses or seize investment opportunities. Property: Can provide rental income and potential long-term appreciation, but selling might be difficult during an economic downturn.

Can you lose money in a savings account during a recession? ›

It's safe from the stock market: If a recession causes short-term market volatility, you won't lose money on your high-yield savings deposits, unlike investing in the stock market.

Can I lose my money in a recession? ›

Recessions can impact your savings in many different ways. Lower interest rates, stock market volatility, and potential job loss can drain your savings. Diversifying your investments, building an emergency fund, and opening a high-yield savings account can help protect your savings.

Where is the safest place to put your money during a recession? ›

Cash and Cash Equivalents

Cash equivalents include short-term, highly liquid assets with minimal risk, such as Treasury bills, money market funds and certificates of deposit. Money market funds and high-yield savings are also places to salt away cash in a downturn.

Is it bad to buy a car during a recession? ›

The current financial situation has important differences from the last recession, and this could be an ideal time to buy a cheap car. Buying a vehicle ahead of a potential recession may not seem like such a great idea, but if you have the resources, now is actually a great time to buy.

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