According to a recent survey, more than 80% of American adults are worried that another recession could be imminent. As a result, they have been making various preparations, including paying off debts, staying in jobs they don’t like, and avoiding any sizeable purchases.

If you find yourself fearing the onset of recession, you may find it reassuring to take protective measures to secure your finances. While the recession may never materialize, at least you will have peace of mind and the confidence that comes from knowing you have taken every precaution to protect your family’s future. 

With that aim in mind, here are some tips that will help you ensure you are prepared in case a recession does come to pass. 

Make A Monthly Budget

Perhaps you’re wondering how to prepare for a recession if you are retired? Or maybe you are fretting about paying off any large outstanding debts when you have several children to feed and clothe? Whatever your current situation, making a monthly budget can help you gain more control over your finances. This, in turn, will benefit you in case a recession does occur. 

In fact, budgeting is vital to successful financial management. Not only does it prevent you from spending more than you can afford, but a detailed monthly budget can also provide crucial insight into any expenses you no longer need or cannot afford. 

Pay Off Your Credit Balance

When preparing for a recession, it’s important that you try and minimize your debt as much as possible. To do this, make sure you don’t miss your monthly credit payments – and, if possible, overpay on any loans or mortgage you may have, if you have sufficient funds to do so.

When prioritizing which debts to pay off first, focus on those with higher interest rates, as these could prove to be costly over time. Once you have lowered or even cleared your debt, you will not only be free of an emotional and financial burden, but you will also be able to focus on boosting your income and making savings. 

Cancel Subscriptions You Don’t Need

Many of us have various monthly subscriptions that we pay – from streaming services and apps to magazines and food delivery services. In fact, according to research, in 2020 the average number of entertainment subscriptions was 12, with millennials having even more. While each subscription may not seem like much by itself, when you have several payments going out every month, it can start to have an impact. 

If you are serious about preparing for a recession, it’s a good idea to take a long hard look at your various subscriptions and consider which ones you could live without. Pruning the subscriptions you use the least, or which bring the least benefit, is a small but effective way to lower your monthly outgoings and help you save your cash for more important things.

Prepare An Emergency Fund

Anyone worrying about their financial future will benefit from squirrelling some of their earnings away in an emergency savings fund. Ideally, you should save enough to cover around six months of expenses, but if you can’t manage that, then three months is the amount to aim for. 

While stashing away such a large sum may seem like a daunting prospect, if you tackle it little by little, pay check by pay check, the amount of money in your emergency fund will slowly but steadily grow. 

Even if a recession never happens, it’s always handy to have some extra money hidden away for a rainy day. Life is unpredictable, and you never know what may be around the corner. Having that financial safety net will give you renewed confidence that you have the resources available to handle whatever life may throw at you.

Avoid Taking On Any More Debts

If you are worried about the prospect of a recession, you should do your best to avoid incurring any more debts than the ones you already have. 

For instance, if you had been considering buying a new car, or redecorating part of your home, and taking out a loan to pay for the work, it’s probably a good idea to postpone this change and focus on paying off debts rather than acquiring any more.

Find A Profitable Side Hustle

While saving money is an obvious way to make your family recession-ready, you can also try and boost your income at the same time. If you have the time and the resources available to you, consider starting up your own little side hustle in addition to your regular job. 

Whatever you opt to do, it should ideally be something that you’re passionate about and that you have a talent for, to help ensure that you stay motivated. Whether it’s becoming a freelance makeup artist, a dog walker, a journalist, a baby sitter, or a part-time bartender, having a side hustle can help you boost your earnings and hone your skills at something you enjoy. 

Who knows, if you are successful enough with your side hustle, in future you may even be able to leave your regular job and pursue your passion instead. 

Choosing A Strategic Job

Job security is a major concern for many people these days, particularly in the wake of the uncertainty and job losses caused by the pandemic. While the vast majority of those jobs were resumed, the spectre of the losses may still cause residual fear. And now, with rising inflation and the prospect of recession looming large, that fear is probably strengthening once again. 

If you are particularly concerned that your job may not be ‘recession-proof’, then you may be considering changing it for something that will be. There are a number of recession-resistant occupations, and, while some may require a specialist degree, others are more flexible when it comes to application requirements. 

Do your research, and if you find a viable opportunity in one of those recession-proof jobs – and the role can match or even increase your income – then it may just be worth your while to make the switch. 

In Conclusion

While the prospect of a recession is undeniably frightening and stressful, by taking various precautionary measures, you can help to ensure that you and your family will have everything you need should the worst happen. 

Knowing that you have the necessary financial resources to keep your lives on track should give you a confidence boost and all-important peace of mind as you contemplate the future.

Disclosure: This is a collaborative post.