10 Worst Purchases You Can Make During a Recession

It’s not easy to predict when a recession will hit, but there are things you can do to make sure you weather it well if and when it arrives.

One key move is to rein in your extra spending and put big purchases on the back burner until the economic outlook is better.

Here are some of the worst purchases you can make in an economic downturn. Prepare yourself financially and consider how a recession might affect your spending plans.

1. A new house

If you're saving money for a down payment and looking to move to a different area, a recession might make you rethink your plans.

Before you take the plunge, consider whether your job is recession-proof or if you have enough money to cover a down payment and other expenses without raiding your emergency fund.

A recession might make it easier to score a bargain on a home, but factor in how a downturn could affect other parts of your budget before you buy.

2. A new car

Getting a new car is another big-ticket purchase you might want to postpone.

Sometimes, buying a vehicle might be necessary. But if you can wait, hold off on buying a new one and build your savings instead. If the economy hits the skids and you lose your job, you don’t want to be saddled with a car loan payment.

3. Expensive vacation packages

We all need the occasional vacation, but consider how much you would likely spend on an expensive vacation package. Is that really wise during a recession?

Instead, consider a local, affordable trip and put the extra cash you don’t spend in an emergency fund. That way, you will have some extra money available if you need it.

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4. Extras at the grocery store

It can be fun to grab some impulse purchases at the grocery store, even if they are a bit pricier than what you would typically buy.

But grocery store extras can add up, especially during a recession. That can hurt your budget and make it more difficult to afford other necessities.

Think about going to the grocery store with a list and stick to it in order to keep costs down. If you still want to pick up some impulse buys, consider nonperishable foods that might be on sale so you can stock up your pantry.

5. Name-brand clothes

It’s a good idea to freshen up your closet from time to time, especially if you need professional clothes for the office.

However, try to stick to more affordable options instead of name brands when you shop during a recession. Or, consider stores discount retailers such as T.J. Maxx or Burlington, where you can find name brands for affordable prices.

6. A vacation home

A vacation home can be a good investment. It might even make you money if you advertise it through websites such as Airbnb.

However, these properties can cost you fees, closing costs, and other expenses that could surprise you. Surprise costs are never welcome during a recession.

7. Items that require financing

Sometimes, you might need to apply for financing to purchase a particular item. Perhaps you want to update furniture for a room in your home, or you need to finance the purchase of a computer for personal use.

Think about how much you want the item compared to how much you need it and adjust your purchase plans from there. Perhaps you can hold off on actually purchasing something and save money for it so you are in a better financial position to buy it later.

8. Memberships and subscriptions

Costs can add up fast if you have monthly subscriptions and memberships for things like the gym or streaming services. And don’t overlook subscriptions for beauty products and books.

Review your monthly subscriptions and find ways to cut back or eliminate them. Little bits can add up to big savings.

A recession is also a time for you to hold off on starting a new subscription until you are in a better financial position.

9. Home renovations that can wait

Home renovations often end up being more expensive than you originally thought, so avoid renovations during a recession unless they are necessary.

Instead, try to save money and perhaps build up your emergency fund. That way, you will at least have cash on hand if you need it for a major emergency repair.

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10. A bigger TV or fancier laptop

Electronics can be an expensive purchase, and they are usually a “want” and not a “need.” So, skip them during a recession.

Think about saving that money instead so you will have extra cash to buy electronics when the economy starts to turn around. That way, you won’t have to get out of debt during or after the recession.

Bottom line

Regardless of whether the economy is doing well or is in a recession, it’s always a good idea to check up on your financial health so you know where you are succeeding and where you need to do more work.

It’s also a good idea to review your finances regularly so you are prepared in case there is a downturn in the economy. Preparation can help you get through a recession without having to bust your budget.

Money tips that can work for everyone

No matter what your bank account balance is, there's always an opportunity to optimize and improve your finances. Here's a quick checklist of things you can look at today.

Focus on paying off your debt . Debt can hold you back from making progress with your overall financial well-being. Aside from cutting expenses, there are tools that can help you pay off debt faster like balance transfer credit cards and debt counseling.

Earning extra income can give you breathing room. If finances are tight, earning some extra money to supplement your income can make a huge difference. A new job is one option to consider, but if you're not ready to make a big change or already retired, a part-time side job could be a better choice.

Cut your expenses. It sounds painful and so not fun, but it doesn't have to be. Take a look at your biggest expenses because that's where you'll probably find the biggest savings. For example, auto insurance rates have been soaring so shopping around for a new insurance company can be the fastest way to cut your bill. Also, look for ways to cut your grocery bill (despite rising inflation).