Financial expert gives tips to prepare for looming recession

INDIANAPOLIS (WISH) — Inflation rates are surging, hitting the highest they’ve been in over four decades and leaving government officials and Americans concerned about a potential recession. 

Andrew Butters, assistant professor in the department of business and economics at IU Kelley School of Business, tells News 8 while there are steps being taken to avoid the economic hardships that may lie ahead, it’s essential Hoosiers have a financial plan in place if a recession does hit.  

“Interest rates are going up and will continue to go up, and what that’s going to do is increase the cost of any borrowing that you’re doing,” Butters said, “whether it’s making a decision about purchasing a home or a car.

“At times when interest rates are really low, the cost of borrowing is low. Now, it’s going to be a more sizable amount of your monthly paycheck or your disposable income. So, it’s a very good time to make sure you have an appropriate understanding of exactly what you have coming in and what you have going out and ensure things are in place in the long run to maintain household stability.” 

Butters also says financial anxiety is real. But instead of worrying about what may happen, people must be action-oriented. He suggests people establish a rainy day fund, scale back on unnecessary spending, and make sure their savings are accumulating.

He goes on to say while it’s not clear what the future holds, he wants people to know the economy has ebbs and flows. Periods of economic contraction and expansion are normal. Should a recession hit, the country will get to the other side of it.