7 Ways to Bulletproof Your Finances Before the Next Recession

On the heels of record-breaking inflation and rising interest rates, economists predict a recession will hit the U.S. in 2023. Higher prices for goods and services, along with a possible loss in income due to unemployment, could leave a gaping hole in the middle of your finances. But households that shield their finances now will be in a better position to face the inevitable downturn. Even if the recession is less intense than expected, the actions you take today could help improve your overall financial health.

Here are seven ways to bulletproof your finances ahead of a 2023 recession.

1. 缩减预算.

Revise your budget to only include essential items. Pause or cancel optional services, 比如杂货配送, 健身卡, and unused online subscriptions. If you can’t do without a particular service, contact the biller about other ways to lower costs. Since companies don’t want to lose customers, some may offer to help you save money by encouraging you to:

• 注册无纸化账单
• Switch to a different service plan
• Use an alternative form of payment

The cost savings could add up quickly.

2. 建立财务缓冲.

Make sure you have money set aside to pay bills if the unexpected happens. Aim to save an amount that equals at least three months of expenses. 这种方式, if you’re forced to take a pay cut or suffer a loss in household income, you’ll have the cash for housing, 食品杂货, and transportation while searching for another source of income. To quickly build a financial cushion, you can:

• 从事副业
• 出售不需要的物品
• Eliminate unnecessary expenses

Deposit the funds you reap from your efforts into a dedicated 储蓄账户, and resist the urge to use the money for other purposes.

3. 偿还债务.

Reducing debt obligations can help you save money, especially on high-interest rate accounts like credit cards. Plus, paying it down could increase the cash you have available to build a financial cushion. Eliminate debt fast by temporarily increasing your income. Speak with your employer about working overtime or consider starting a side hustle.

4. 分散投资.

Review your investment portfolio and determine if it might be wise to rebalance different asset classes, 比如股票和债券. This could reduce losses during an economic downturn if one asset underperforms. Other portfolio assets are likely to remain stable or bring higher-than-average returns.

5. 监控你的支出

It’s essential to be mindful of your spending. 冲动购买, even with deep discounts or clearance prices, could chip away at your ability to stick to your budget. Make sure you only spend money when necessary. Cut back on luxury items, and stick to your downsized budget.

6. Re-evaluate your insurance needs.

If you lack adequate insurance coverage, you could be one accident or health emergency away from a financial disaster. The damage could be even more devastating if something occurs during a recession. Without enough coverage, you might have to pay out of pocket for an accident or other event. Review all policies, including health, home, and auto.

7. 不要惊慌.

While it’s important to prepare for a recession, it’s also important not to panic. Overwhelming fear rarely inspires the action needed to get finances in order, especially amid economic uncertainty. Instead, focus on preparing one part of your finances at a time.

Since no one knows exactly when the recession will arrive or how long it will last, maintaining a solid financial foundation is recommended regardless of the health of the U.S. 经济.