Financially Prepare for a Recession. 10 Moves You Can Make Today

Things have been going pretty great in our economy for a while and now there is talk of a new recession. In fact, some people believe sessions can even be predicted. When that happens talk quickly happens about how to prepare for a recession.

Whether or not there is any way to accurately predict when a recession will hit, there is no doubt that one will eventually be upon us. It’s been almost 10 years since our last recession and if we could survive that, we can survive the next one. But how?

Here are 10 moves you can make today to help you financially prepare for a recession no matter when it might hit.

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Get totally financially informed

The best way to manage your money, especially when you are trying to prepare for a recession, is to know exactly how to make your money work for you.

One of the smartest moves I ever made was to learn how to better my finances, live on a budget and get an understanding of how to make money work for me instead of against me.

Are you ready to do the same?

Join the waitlist for my Budget Hacking Course to learn how we created an additional $1,000 liquid cash and become debt free in 18 months!

Not only will you get free financial trainings along the way, you will get first dibs access to the course when it goes live!

What does the course cover?

In Budget Hacking I go through how to completely dominate your money through some of the following methods.

  • Taking a spending inventory
  • Trimming the fat from your budget
  • Looking out for “phantom costs”
  • The mix and match method to build a solid budget

It’s laid out with easy to follow modules that give you practical ways to approach your finances so you can start winning with money.

Additional financial resources:

Pay off your debt, fast!

Getting our family out of debt was one of the best things I have ever done.

How We Paid Off $6,000 in 6 Months

Just take a moment to add up the amount of money you spend each month on your debts. This includes things like:

  • Car loans
  • Student loans
  • Credit card debt
  • Personal loans
  • Mortgage

Once you have taken a moment to think about how much money you are actually spending each month toward debt you might get an idea of how beneficial it would be to you and your family to be done with that debt for good!

Now, when most people say they are debt-free, they don’t include their mortgage in that. But that doesn’t mean it’s not possible to pay off your mortgage sooner!

Quick tips for faster debt payoff

There are some smart moves you can make that will help you pay off your debt smarter and faster when you are preparing for a recession.

Get debt consolidation

If you have several debts, especially with high-interest rates, you could get a lot of relief from debt consolidation. Not only can you get lower interest rates, but a lower monthly payment as well.

Include extra debt payments in your budget

Putting extra money toward your debt each month will help you pay off your debt faster. Grab free Debt Snowball printout here.

Negotiate your interest rates

There are a few ways that you can lower your interest rate besides debt consolidation and that’s through negotiating or balance transfers.

Grab my FREE Maximize Your Negotiations Scripts

When calling your credit card companies to negotiate your interest rate there are 2 tips that go a long way:

  • Ask to speak to a manager right away.
  • Know the interest rate you’re wanting — don’t ask.

Join my FREE Fun Sized Budgeters Facebook Group

Have a secure emergency fund

When a recession hits, things can get really rough and job losses start happening. That’s why it’s super important to prepare for a recession by have at least 6 months worth of living expenses saved into an emergency fund.

I recommend using an online bank to build your savings for two major reasons.

  1. It’s hard to withdraw funds when it’s not connected to your regular account. Although technology has made it very easy to access our money no matter what.
  2. Online banks offer higher compounding interest rates than regular banks do.

What is the best account for an emergency fund?

The best-paying savings account available for saving your emergency fund is through CITBank.

CITBank has an amazing savings account that actually allows you to make money on your savings. Their Savings Builder savings account offers compounded interest at 2.2%!

That means the money you deposit will earn interest and then that interest will earn interest too!

How do you open a Savings Builder?

It only costs $100 to open a Savings Builder account and you get locked into the 2.2% interest rate when you deposit $100 per month. This is truly amazing because most banks require a minimum deposit of $5,000 or so.

Prepare for a recession ahead of time with an account like this and it will benefit you big time if and when the recession does finally come!

Open a Savings Builder account today.

Trim the fat in your budget

Another important thing to do in order to prepare for a recession is to start practicing frugal living now.

One of the best ways to start doing this is to look for ways you can reduce your monthly spending and/or cut your expenses altogether. You can learn how to do this with budget hacking or try some of these top recommended apps.

Apps that help you cut back:

  • Cushion – Cushion helps you analyze your bank accounts and finds places to get you refunds on bank and late fees
  • Trim – Trim is a great app that looks at your monthly bills then looks around for cheaper prices. In fact, within 1 hour of signing up, Trim had saved me $20 on my internet bill!
  • Rakuten – Rakuten (formerly Ebates) not only gives you $10 FREE when you sign up, but they have a variety of discounts and rebates offered through clothing, food, vacations and more!
  • Dosh – With Dosh, you don’t have to search for rebates or scan coupons. If you make a qualifying purchase with one of your accounts, Dosh instantly gives you rebate money. Get $5 when you sign up.

Ways to reduce your monthly bills:

  • Aaptiv – You can get total fitness, meditation, yoga and other workouts connected right to your phone for only $15 per month! Get your first month free! 
  • Arcadia – Create your free Arcadia Power account, get connected to clean energy and spend less on your power bill. Do right by the planet and your wallet.
  • Mohu – Getting a digital antenna through Mohu can save you thousands of dollars, plus they make it easy to connect through your entire house.
    • Another great option is eliminating your TV and cable all together!

How to get phone service for $10:

  • Tello – Get unlimited talk, text and 1 GB of data for only $10 per month.
  • Ting – Ting is a great way to reduce your mobile expenses each month. You could easily reduce your phone bill by OVER half.

Sell now if you’re struggling

You can pay off your debt and build up an emergency fund, but there are some debt you might already be struggling to support.

Things like a large vehicle payment or even a mortgage payment.

If you are over your head in areas like this, now is the time to sell.

Three years ago my family and I accepted the realization that we were house poor and in desperate need of change. We sold our house and paid off our debt so that we wouldn’t feel financially vulnerable anymore.

If you need to sell your house

You can get connected with realtors in your are right now. This is a great way to get an estimate on what your house is worth and will help you get an idea of what houses within your price range might look like.

Selling a house is never an easy thing to do, but if you are already feeling at risk, it might be one of the smartest moves you can make.

If you need to sell a vehicle

Some people have vehicle debt payments larger than the cost of their mortgage or rent. This is insane!

You should not be going broke month after month because of a car or other vehicle. While there is always the option of refinancing your car to get a lower monthly payment, the best bet is to see if you can sell it and pay off the remainder of your current loan.

Why you shouldn’t refinance your auto loan.

Evaluate your 401K

Making sure you have a diversified 401K portfolio is one of the best ways to prepare for a recession. Doing this helps to make sure you keep your retirement financially secure.

If your employer offers access to a financial advisor, set up a time to meet with them so that you can make sure you have the best 401K portfolio possible.

Don’t trust that your employer has set up a solid 401K for you! That’s not their job, it’s your job.

My best advice to you is to read this great article on Forbes about How to Recession-Proof Your 401K.

Should I drastically change my 401K?

The best advice is that a potential recession does not mean you should panic or drastically change your 401K. Instead, make sure you are fully informed on where your funds are going so that you are set to sustain any potential recessions.

Make sure you’re networking

Unfortunately during a recession, we all know there is a chance of job losses. Even if you are not currently seeking new employment it might be a good idea to make sure you are active on platforms like LinkedIn.

This is a smart move to make so should you experience job loss during a recession, you have a greater potential for finding new work quickly.

9 Ways to Easily Improve Your LinkedIn Today

Work with a financial advisor

Each person is working with a unique financial situation. While it is super important to be informed, and to access your employers financial experts, sitting down with a financial advisor is another smart move you can make.

Find a financial advisor near you.

Choosing a financial advisor

There are books I really loved that helped clear up so many financial gray areas for me. Those books are:

Never before did I consider that choosing a financial advisor would be a strategic move on my part. I want to share with you the 7 questions Tony Robbins suggest you ask potential financial advisors.

  1. Are you a registered investment advisor? – You want a “yes.”
  2. Are you or your firm associated with a broker dealer? – You want a “no.”
  3. Does your firm offer proprietary mutual funds or separately managed accounts? – You want a “no.”
  4. Do you or your firm receive any third-party compensation for recommending particular investments? – You want to make sure your investor isn’t receiving any kickbacks for recommending certain products to you
  5. What’s your philosophy when it comes to investing? – Avoid anyone who thinks they can beat the market
  6. What financial planning services do you offer beyond investment strategy and portfolio management? – Make sure they are aligned with your particular financial situation and stage in life
  7. Where will my money be held?

Make your insurance works for you

One major financial area that most people overlook is their insurance. Making sure you are getting the best insurance coverage is crucial at every point in time, not just during a recession.

A major area that is overlooked when it comes to insurance is disability insurance. The scary truth is that 50% of bankruptcies and foreclosures are due to people not being able to pay their medical bills! Make sure you are covered — get coverage starting at $9 per month.

Here is a quick run-down of the insurance coverage I made sure my family and I had. It’s crazy how one tiny mistake could actually cost you a million dollars.

Avoid new debts

I hope it doesn’t need to be said that if you should quick about paying off your debt, you should also be avoiding incurring any new debt.

This includes things like new vehicles as well. Often times when a car starts to go out, people will just finance a new one. In some cases, this may be your only option, but don’t overlook the idea of getting the old one fixed or saving up for a new one.

Prepare for a recession by being hyper aware of your finances and avoid adding any additional monthly costs to your expenses.

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If you think a recession is on the horizon, don't stress, there are 10 things you can do today to help you financially prepare for a recession.