How to prepare for a recession: 5 money rules experts recommend

That’s not just a premonition. The forecast market currently estimates a 55% chance of a recession In 2025, it has increased points by more than 30% since Trump 2.0 launched.

President Trump A chaotic tariff campaign It sent financial markets to tailspin, trampling on consumer trust and supplying fuel Recession concerns. The slogan “Make America Again,” released along with the threat of an aggressive trade war, caused more economic disruption than certain.

When households see a decline in investment, they fight High price and I’m worried about layoffsthey tend to spend less. When companies don’t know where the market is heading, they tend to cut costs and slow down employment. These factors alone drive a slowdown in the economy.

He said economic uncertainty could be a self-fulfilling prophecy Shan SavedraFounder and CEO of Save My Cents, a personal finance education platform.

The outlook for a recession rightly causes anxiety and stress. The recession is not so abnormal as it is painful. Modern capitalism has a historic boom and bust cycle. Since the mid-20th century, the United States has experienced an average recession of 11 months, once every five to seven years.

The last US recession began in March 2020 with the Covid-19 pandemic. By April, Over 16 million employees It’s lost. Federal policymakers have implemented relief and recovery measures to alleviate difficulties and promote economic recovery. The pandemic recession was the deepest, but also the shortest since World War II.

Since then, the economy has grown significantly, and many experts have said we are planning to reset. “That’s never a problem ifbut when That’s the next recession,” Sarvedora said.

Looking back at past recessions, we understand what we are facing and take positive action when it comes to money decisions. That means Check in to your financial plan Understand what changes you need to make to keep things going well.

5 Ways to Protect Your Money in a Recession

Here are five steps experts can take right now.

1. Don’t panic, just prepare

parable The economy is turmoilthe recession has not been officially a hit. Most of us have time to assess our financial situation and plan before we get scared of recession pressure.

For now, focus on establishing realistic safeguards and strengthening your financial foundation. Consider the specific steps you take if you lose your job. I will contribute to Emergency Fund And your management Debt Level Now we can create a buffer against the potential financial shock of the recession.

Uncertainty can lead to impulsive behavior, such as losing your investment and selling it. “Fear narrows our focus and limits our cognitive abilities, so it’s really important to prepare now,” he said. Lisa Countryman CirosCEO of JVS Bay Area, a nonprofit workforce development organization.

2. Stockpiling cash

Cash is important during recessions. in Unemployment Events Alternatively, reducing work hours requires you to be able to cover your monthly bills without resorting to credit cards or immersing yourself in a retirement account.

Experts recommend having an emergency fund that can cover your living expenses for 3-6 months. To settle for an amount you feel safe in your financial situation, consider your current income and job stability. Monthly expenses (housing, medical expenses, food, utilities); and your future plans (expanding your family, moving, caring for your loved ones).

To prepare, Adjust your budget Don’t overgrow your finances at unnecessary costs. Try delaying major purchases such as holidays and home purchases and calling the claimant (utilities, cables, car insurance, etc.) to see if there are discounts or promotions.

For hints: The best place to maintain your emergency funds is in an account you can access to to keep your money safe. Saavedra recommends a High-yield savings account Because it is a liquid and provides a solid return to your balance. Money Market Account and Certificate of Deposit (CDS) are also optional.

3. Start job hunting before you need it

If there are massive layoffs during a recession, it can take months to find new jobs. Last year, JobSeekers averaged its time for the recession story before even headlines took over 8 months He then got a job on 294 applications.

Part of the financial safety net construction involves unemployment plans before it happens, according to Countryman-Quiroz. But being prepared is just the first step. Proactive networking to expand professional connections can also open doors to new opportunities.

More importantly, try to keep track of it for 30 minutes each week and concentrate Building new skills To help employers stand out. Performing this preparatory work while hiring can help you move into a new role or industry.

“It doesn’t matter where you are in your career or workforce. Building skills in technology, especially AI, critical thinking, collaboration and communication, is extremely important,” Countryman-Quiroz said.

For hints: Finding a side hustle or freelance job can provide supplemental income and provide protection against potential unemployment or reduced working hours.

4. Take a measured approach to investment

Market recessions are volatile, but there is always no need to overhaul your investment strategy. The stock market has a history of recovering from dip and growing over time. It often makes sense to sell when things are down I missed recovery.

For most people, maintaining the course is better than making dramatic changes.

“If you’re at least five years apart in retirement, it’s not a time to panic,” Sarvedora said. That said, if you are approaching retirement, it may be worth considering a safer investment. A money market fund or CD can be a good option if you need to reduce more balance and risk.

5. Prioritize getting out of debt

Having debt during a recession is even more burdensome, especially if you have a high-profit credit card balance that is preying on your income. If inflation is high or increased, these APRs are only more painful.

you It doesn’t have to be 100% debt Get through the recession. The goal is to reduce financial vulnerability rather than draining savings.

Before tackling debt, Saavedra recommends saving at least a month’s cost of living with emergency funds. Next, start by paying off your debt at the highest interest rate (over 10%) and paying the lowest interest over time.

If you are juggling some high-profit debts (such as medical expenses, credit cards), Debt settlement loancombine these liabilities into one fixed monthly payment and a single personal loan.

Another strategy is to borrow credit card debt. Balance Transfer Card A 0% introductory APR provides a breathing room to avoid interest rates for 12-24 months. Once that introductory period has ended, the card’s regular APR begins, so you need to plan to pay off any remaining items.

Navigate an uncertain economic future

The recession is nothing new. The economy cycles periods of growth and decline regularly. It doesn’t scare a recession. But what we can do is protect our financial livelihoods and protect what we have. It’s much easier to do with planning.