Seven Ways You Can Financially Prepare for a Recession

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Editor's Note: With inflation soaring at levels beyond the memory of a majority of Americans alive today, attempts to quell the economy also raise the potentiatl for recession, something that occurs with greter frequnecy than periods of severe inflation. Nonetheless, it is worrisom, with particular concern for seniors, espcially thoe who have not been able to build a level of wealth to protect themselves from times of economic instablity. Writing in The Washington Post on June 15, 2022, Michelle Singtletay addressed ways to preare for an inevitable recession. Following is an excerpt that reduceds here seven recommendations to bullet points. Follow the link a tthe bottom of the page to read her full prescription for getting yourself ready for recession.

Inflation is at a 40-year high. Interest rates are rising. And gas prices have hit a frightening $5 a gallon.

The stock market is taking investors on a roller-coaster ride with terrifying drops. Even if you haven’t looked lately, you know that the value of your retirement account is down. Cryptocurrencies are crashing, not surprisingly.

And now you’re hearing that we may be in a recession, or one is inevitable.

You remember the Great Recession and how harsh it was for so many. So telling you to “calm down” or that “this too shall pass” doesn’t address the anxiety you’re feeling about your financial well-being.

It’s okay that you don’t feel things are okay.

Most Americans expect inflation to get worse, Post-Schar School poll finds

But what you shouldn’t do is make moves based on recessionary fears that can put you in a worse position financially.

Recessions don’t last forever.

On average, recessions last 11 months, according to Lindsey Bell, chief markets and money strategist for Ally. The shortest recession on record is the 2020 pandemic-induced recession, which lasted just three months.

Here are seven tips to protect yourself whether a recession is coming or not [follow link at bottom of page for more details].

1. Don’t be afraid of a bear market. You may not even know what a bear market is but you’re primed to be petrified of one.
2. Don’t try to time the market. A lot of folks may want to get out of the stock market or reduce what they’re investing until things get better. That is the definition of trying to time the market. It’s impossible to know the best time to get out and when to jump back in.
3. Get rid of your credit card debt. Now. “Job number one for anyone with a credit card is to pay off their balances as soon as possible,” said Matt Schulz, chief credit analyst at LendingTree. “When a recession may be on the way and interest rates are rising rapidly, it’s even more important.”
4. Stockpile savings. Save while you have the extra money because a recession can quickly change your circumstances.
5. Establish a backup to your emergency fund. In addition to having a recession rainy-day fund, Benz recommends figuring out where you might go for additional funds if you needed them in a pinch.
6. Don’t underestimate the power of having bonds in your retirement portfolio. Typically when stocks are down, bonds balance out your stock holdings. But bond prices have been hit as well.
7. Get a side gig. Many employers are begging for workers.

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