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Budgeting, personal finance

5 Ways to Make Your Finances Recession-Proof

Experts predict a possible recession in the near future. Are your finances prepared?

On Behalf of Veitengruber Law | May 27,2022

It's true that none of us has any control over a potential US recession, but you can control how you prepare when one is predicted. We are experiencing uncertain financial times. Many experts believe we are heading into a recession. How you prepare now will impact your ability to weather the economic storm and make it through to clear skies on the other side. Today we've got 5 tips that will help you "recession-proof" your finances.

1. Review Your Budget with a Recession in Mind

Look over your budget as it stands right now. Could you continue paying all of your bills and expenses if your income decreased? Would a potential increase in rent or mortgage payments do you in? Is your budget capable of handling rising inflation? Determine where you could cut expenses to give yourself wiggle room to keep up with a volatile financial landscape.

2. Bolster Your Emergency Fund

With the money you'll save by dialing back your spending, work toward building a sizable emergency fund. Aim for as much of a savings cushion as possible. This will allow you to make ends meet if a recession affects your income and/or your cost of living.

While we advise you to build up as much savings as possible, every penny counts. If you find yourself thinking, "It's too little too late! I can't save enough to make a difference!" - remember that even a small emergency fund is better than none.

3. Pay Down High-Interest Debts

High-interest credit cards can be a huge drain on your budget. Carrying a balance from month to month can cost you thousands of dollars in the long term. Working to eliminate this debt now will reduce your monthly expenses so that if a recession does happen, your most important financial obligations will be met. Also, the less debt you have, the more money you'll be able to save.

4. Don’t Mess With Your Investments too Much

It can be difficult to hold tight when you see stock prices plummeting. But selling while prices are falling can actually lock in your losses. If you keep your money where it is, you will likely make back what you lost once the market corrects itself. If you are doing long-term investing specifically for retirement, your best bet for success is to consistently put money into your accounts—even if the current stock market seems scary.

5. Try not to panic.

The most important thing to keep in mind is that excessively worrying about a recession won't help anything. Recessions are an unfortunate reality of life. They have happened before, and they will likely happen again. Trim your budget, build your savings, and make smart financial decisions. Getting yourself into a better position to manage any shifts in your financial reality will help you feel confident in your ability to handle the next recession.

If you are concerned that your level of debt seems unmanageable, we can help you be in a better position if and when a recession does occur. We offer debt management, mortgage modification, bankruptcy, credit repair, and more. We have the solutions to put you on a path to financial stability, no matter what the future holds.

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