Preparing for a recession? Experts recommend hoarding cash and learning new skills.
There will be no thin air in the recession.
Over the past month, President Trump’s chaotic tariff movement has put financial markets at a close, trampling consumer confidence and intensifying significant concerns about the slowdown.
Families are fighting high prices, facing layoffs and watching their investments fall, which leads them to spend less money. Companies are uncertain where the market is going, cutting costs and delaying hiring.
Financial uncertainty could become a self-fulfilling prophecy, said Shang Saavedra, founder and CEO of personal financial education platform Save My Cents.
Still, the economic downturn is not an abnormality. Modern capitalism has historic boom and bust cycles. Since the mid-20th century, the United States has experienced a recession every 5 to 7 years, with an average length of 11 months.
The last recession began with the Covid-19-19 pandemic in March 2020. By April, more than 16 million jobs were lost. Federal policymakers have taken relief and recovery measures to alleviate the hardship and stimulate economic recovery. The pandemic recession was the deepest but shortest post-World War II era.
Since then, the economy has grown very much and many experts say we want to reset it. “This is definitely not ifbut when The next recession is. ” Savedra said.
Looking back on past recessions can help us understand the problems we face and allow us to take positive action on monetary decision-making. This means checking in with our financial plan and figuring out what we need to do to keep track of it.
Here are some tips experts say you can prepare for turbulent times now.
Make a plan now
Even if the economy is a mess, most of us have time to evaluate our financial situation and make plans before the recession becomes a reality.
“Some people wait for a formal recession before changing their financial behavior,” said Berna Anat, a financial educator and author of Money of Money: “No one teaches us all about financial information. Anat suggests trying to reschedule the prepared mentality rather than the panic mentality.
For example, focus on building realistic safeguards and strengthening your financial base. Consider the specific steps you will take if you are fired. Contributing to emergency funds and managing your debt levels now can provide a buffer for the potential financial shocks of the recession.
Impulsive actions, such as selling investments at a loss, can bring you back in the long run. “Fear shrinks our focus and limits our cognitive abilities, so it’s important to be prepared now,” said Lisa Countryman-Quiroz, CEO of JVS Bay Area, a workforce development nonprofit.
Make your savings accessible
If you lose your job or reduce your working hours, you need to be able to pay your monthly bill without borrowing money or immersing yourself in a retirement account.
“You don’t want to find yourself relying on credit as the only tool for emergencies,” Arnat said.
Experts recommend having an emergency fund that will allow you to pay for three to six months of living expenses. To determine the amount that makes you feel financially safe, consider your current income and job stability; your monthly expenses (housing, medical expenses, groceries, utilities); and your future plans (expand everyone, move, take care of loved ones).
Prepare, adjust your budget and avoid excessively extending your financial position through unnecessary expenses. Delay large purchases, such as holidays or home purchases, and avoid increasing balances on your credit card or taking out new loans that will accumulate interest.
Expert tips: The best place to ensure an emergency fund is that you have access to an account that ensures your funds are secure. Saavedra recommends using a high yield savings account because it is liquid and provides reliable returns on your balance. Money Market Account and Certificate of Deposit (CD) can also be an option.
Seek a job in advance
When mass layoffs occur during recession, it can take several months to find a new job. Last year, it took an average of eight months for job seekers to get a job before talking about the recession that had even dominated the headlines.
Countryman-Quiroz said that part of building a financial safety net involves planning before unemployment. But preparing a resume is only the first step. A positive network to expand your professional connections can also open doors for new opportunities.
More importantly, try to do 30 minutes a week for 30 minutes to focus on building new skills to help you stand out. Doing this preparation while hiring can help you more easily transform into a new role or industry.
Countryman Quiroz said: “Whether you are in your career or in the workforce, it’s crucial, and that’s absolutely crucial.
Read more: How to use AI to find your dream job
Balance your investment
Although the market decline is unsettling, you don’t always need to overhaul your investment strategy. The history of the stock market is to recover from decline and grow over time. Selling at sale usually means missing recovery.
For most people, it’s better to keep the course than to make a huge change: stick to the investment that is comfortable for you and keep investing.
“If you retire for at least five years, it’s not the time to panic,” Savedra said. That said, if you’re going to retire, it might be worth considering a safer investment. If you need more balance and less risk, money market funds or CDs may be a good choice.
Priority repayment of debts
During the recession, debt becomes even more burdensome, especially if you have a high interest rate day credit card balance swallowed up with your own income. If inflation remains high or increases, these APRs will only become more painful.
You don’t need 100% of your debt to survive the recession. The goal is to alleviate your financial vulnerability, not to exhaust your savings.
Before you settle your debt, Saavedra recommends keeping your living expenses for at least one month in your emergency fund. Then, first pay the debt at the highest interest rate (10% and above) so that you can pay the minimum interest.
If you are juggling several high interest debts (medical bills, credit cards, etc.), you may also consider a debt consolidation loan that combines these debts into a single personal loan and provides a fixed monthly payment.
Another strategy is to move your credit card debt to a transfer card with a balance of 0% APR starter card, which gives you some breathing space to avoid 12 to 24 months of interest charges. After the introductory period, the card’s regular APR starts to start, so you need a plan to pay off what’s left.
Lay the emotional foundation
Preparing for a recession involves more than just money. It’s about creating a safety net when you’re stressed and building a critical lifeline for your emotional well-being.
“You want to be emotionally supported because they know they will rely on themselves not only when the seasons change,” Arnat said.
For example, connect with close friends and family to discuss ways to support each other. Consider establishing informal agreements or exchanging help for meals, care, carpooling or home maintenance. Anat also recommends that you connect with local co-aid funds in your community and explore ways to contribute resources or get support. You can start researching mental health services in your area, especially those that offer sliding scale fees or affordable care.
Navigate the uncertain financial future
Recession is not new. According to Anath, if you think you are a captain or captain, the recession is like a big wave or a storm. Size and range are often unpredictable, but all you can do is prepare for the worst.
