Search
Close this search box.
Search
Close this search box.

Recession Survival Guide: Proactive Measures to Protect Your Financial Health

What is a Recession

You don’t have to spend long reading the news to learn that a possible recession might be on the horizon. Every reputable financial platform is ringing the alarm that a recession could be in store for 2023. Are you ready?

What is a Recession?

The economy always has peaks and troughs. You can see this in real-time in the jagged line of stocks as they go up and down as people trade. Usually, these fluctuations are minor and relatively fleeting. However, a recession reflects a deep, prolonged dip in economic activity. 

In other words, a recession slams the brakes on the economy. It slows down growth and limits the gross domestic product (GDP). This sets off a chain reaction that results in higher unemployment rates, reduced consumer spending, and diminished business activity.

While no one can predict recessions with unerring certainty, experienced economists can read market indicators that suggest an economic downturn is imminent. One of many warning signs is an inverted yield curve, which means rates on short-term loans have surged far above the rates on long-term financial products. 

According to NPR, today’s inverted yield curve is screaming recession. It joins these other red flags that a recession is on its way within the year. 

What Does a Recession Mean for You?

So far, we’ve talked about the economy in broad strokes. Let’s switch gears to focus on how a recession might affect you. 

A recession has the biggest impact on job security. As the economy slows down, retail sales and production levels tank. Eventually, businesses have to close up shop due to lower demand, which could result in the risk of layoffs and limited employment opportunities for you. 

With fewer people working, consumer spending tends to decrease. After all, you want to prioritize essential expenses and tighten your budget any time your ability to make a living is at risk. This can kick-start another wave of layoffs. 

A Recession is Nothing Like Other Financial Emergencies

Usually, when financial disaster strikes, you can consider a personal loan or line of credit for help. Like when your automatic transmission gets stuck in second gear. You can apply for a loan to help get you money when you need it in emergencies, like covering your transmission repair when you don’t have the savings. 

But how do these financial tools shape up in a recession? 

Generally speaking, a personal loan or line of credit is a stopgap or safety net that’s tailored for specific circumstances. Most lending experts recommend a personal loan or line of credit when unexpected and minor expenses catch you off guard, and you can’t put it off or pay for it out of pocket. 

A recession does not match this advice for the following reasons:

    • It’s Not Unexpected: According to the National Association for Business Economics (NABE), a striking 58% of economists forecast a recession in 2023. 
  • It’s Not Minor: While recessions can vary in length, they can last for months at a time. The last one, which started in 2007, lasted 18 long months, with many people taking much longer to recover. Some people are still feeling the effects today, more than 15 years later.

You also have to think about how the Federal Bank might affect the lending industry during economically tough times. The central bank has already increased the prime rate of borrowing, and it’s normal to tighten lending criteria in a recession. This doesn’t necessarily guarantee you’ll face high costs or barriers when borrowing, but it could complicate things. 

While borrowing money might be an option for an unexpected auto repair, it may not be the ideal safety net for a recession. 

Tips to Prepare Your Budget for a Possible Recession

With the usual financial safety nets off the table, how can you live through another recession? Here are some things you can do to batten down the financial hatches. 

1. Build an Emergency Fund

You can weather the storm of a recession much easier when you have a well-stocked emergency fund. Some experts say to save three to six months’ worth of living expenses, but you could sock away more. That way, you can live off this fund if you lose your job. 

2. Reduce Debt and Minimize Expenses

You don’t want to have to worry about paying down debt when you’re earning less, so do what you can to pay off high-interest debt, such as credit cards, personal loans, and auto financing. 

This is a big job that’s made easier when you use a budget. This spending plan helps identify areas where you can cut back without sacrificing your essential needs. Redirect those funds towards debt repayment or building your emergency fund.

3. Diversify Your Income Streams

Paying your bills with just one job puts your finances at risk. If the recession causes you to lose this job, you also lose your ability to make ends meet. By diversifying your sources of income, you may be less affected by the loss of one job. 

With that in mind, it’s a good idea to spend some time enhancing your skills right now. Professional self-development could boost your employability. 

4. Stay Informed and Seek Professional Advice

Stay updated on economic trends, news, and expert opinions. If you’re still confused, check out a non-profit credit counselling organization. You can partner with a financial advisor who provides personalized guidance based on your specific financial situation and goals.

Stay Calm & Prepare On

The alarming headlines warning of a recession can be scary, especially if you were hit hard by the last economic downturn. But you stand to have a better chance at weathering this one if you prepare for it early.

Follow these tips to reinforce your finances. If a recession happens, you’ll be in a better position. Even if it doesn’t happen, you’ll still benefit from these money management tips. 


Subscribe to Our Newsletter

Related Articles

Top Trending

create Shopify store
Enhancing Shopify: SEO Services for E-commerce Stores
Chicago Careers Temp Agency Guide
Chicago Careers: Your Guide to the Right Temp Agency
female naruto characters
50 Most Iconic Female Naruto Characters [Ranked]
February 27 Zodiac
February 27 Zodiac Secrets: Discover Your Astrological Profile
11 most paused movie scene
11 Most Paused Movie Scenes in Hollywood History

LIFESTYLE

Egyptian Cotton Sheets for Your Bed
A Beginner's Guide to Choosing the Perfect Egyptian Cotton Sheets for Your Bed
Long Lehenga Choli
Elegance Redefined: Navigating the Diverse World of Long Lehenga Choli Designs
valentines day outfits
Top 20 Trendy Valentine's Day Outfits in 2024 For Every Occasion
eldritch foundry
Unleash Your Imagination With Eldritch Foundry Custom Miniatures
jayda wayda braids
How Long Do Jayda Wayda Braids Last [Durability and Maintenance Tips]

Entertainment

female naruto characters
50 Most Iconic Female Naruto Characters [Ranked]
11 most paused movie scene
11 Most Paused Movie Scenes in Hollywood History
yugenanime
What Happened to Yugenanime: The Reason for Sudden Disappearance
Goth Cartoon Characters
The Evolution of Goth Cartoon Characters in Popular Culture [20 Iconic Characters]
animeowl
Why is AnimeOwl Not Working: Common Issues and Solutions

GAMING

Crypto Gambling Innovations
Innovations in Crypto Gambling: Shaping the Future of Online Betting
User Experience Design in Online Casinos
The Role of User Experience Design in Online Casino Platforms
New Online Service for Fans of Sports Betting and Casino Games
A New Online Service for Fans of Sports Betting and Casino Games
Are Online Gaming Bonuses Worth Pursuing
Are Online Gaming Bonuses Worth Pursuing These Days?
why does turles look like goku
Why Does Turles Look Like Goku: The Saiyan Secret Explained

BUSINESS

Work Life Balance Europe vs America Comparison
Europe vs America: Decoding Work-Life Balance Differences
Romania 28th Place EMEA Private Companies Ranking
Romania Rises to 28th in Top EMEA Destinations for Private Firms - PwC
Employee Advocacy
The Role of Employee Advocacy in Enhancing Your Online Reputation
Top 10 World's Wealthiest Men
Top 10 World's Wealthiest Men: 2024 Rankings Revealed
Complexities of Pricing Algorithms
Navigating the Complexities of Pricing Algorithms

TECHNOLOGY

Google Apologizes for AI's Shocking Replies
Google Apologizes for AI's Shocking Replies on Controversial Figures
How to Encrypt Your Gmail Messages
Is Gmail Closing in August? Google Clears the Air
Software Development Career Success Tips
Tips For Succeeding In Your New Career As a Software Developer
Elon Musk
Elon Musk Hints Xmail Launch: A New Gmail Alternative
Laser Marking
Laser Marking: A Catalyst for Industrial Innovation and Sustainability

HEALTH

Norovirus Cases Surge US Northeast CDC Report
US Norovirus Surge: CDC Highlights Spike in Northeast Cases
Top Healthiest and Unhealthiest Countries
Top Healthiest and Unhealthiest Countries Globally - 2024 Rankings
Best Way to Prevent Gum Disease
What is the Best Way to Prevent Gum Disease?
Norovirus Outbreak Northeast CDC Data
Norovirus Outbreak Hits Northeast: Latest CDC Data Reveals Spread
Brain Stimulation RTMS vs DTMS
Decoding Brain Stimulation Therapies: RTMS vs DTMS Explained