How To Recession-Proof Your Life: 6 Important Steps To Monetary Safety

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Donald Trump’s erratic tariff stunts, unstable foreign policy, and careless government job and program cuts over his first seven weeks in office have resulted in uncertainty across all financial markets. Consequently, that uncertainty plus his refusal to rule out a recession sent major markets into freefall this week, potentially putting your financial security in jeopardy.

“Markets do not like uncertainty and the administration is creating a lot of confusion. This is a Trumpster fire,” Franklin Templeton Institute strategist Chris Galipeau said in market commentary.

With the self-described “stable genius” putting his unhinged instability on full display with a complete lack of genius – it’s time to climb out of the Trumpster and fortify your finances for a possible recession.

What Is A Recession

A recession is a significant downturn in economic activity resulting in declining Gross Domestic Product (GDP). In turn, real income drops, unemployment rises and financial turmoil ensues.

The decline has to last over two quarters for economists to classify it as a recession.

The GDP increased 2.3% in the fourth quarter – the last under the Biden administration.

Even before the dive of financial markets, the Federal Reserve Bank of Atlanta was sounding  Trumpcession alarms. The March 6 GDPNow forecast estimated annualized growth for this quarter will be -2.4%.

Does it sound like this is a good time to fortify your finances against a possible recession? If so, read on. We have 6 suggestions for maintaining your financial security.

Step 1: Do A Checkup From The Neck Up

A reduction in income and the value of investments, such as your 401k, is scary. However, the worst thing you can do is panic – especially if you are invested in the stock market.

If you have invested for value – meaning you bought stock in companies that are well run and have a good market for their products – the loss of stock prices does not necessarily indicate it was a bad long-term investment. Those companies usually regain their market value.

A dip in the stock price of a sound company may even be a buying opportunity.

However, if you are hesitant to put money in a down market, you might consider investing in Treasury bills or high yield bank accounts.

Step 2: Add To Your Emergency Fund

Now is also a good time to pad your emergency fund. In a worst-case scenario, such as losing your job, having quick access to cash increases your financial security. In addition, a larger emergency fund may keep you from dipping into investments at a time when their price is down.

Step 3: Pay Down Debt – Especially High Interest Debt

Reducing or eliminating debt is a goal for many people who want to get control of their finances. In rocky financial times, it is even more important.

The first thing you need to do before getting where you want to go is to determine where you are. So, to pay down debt, list all your debts and interest rates. Next, you should prioritize how you want to get rid of those debts.

Two approaches often recommended are the avalanche or snowball methods.

The avalanche method has you putting as much as you can afford toward your largest debts, usually with the highest interest rates.

The snowball strategy has you paying off your smallest debts first. Psychologically, this approach makes for more immediate gratification and frees money to put toward other debt or to bolster your emergency fund. Either way, reducing debt increases your financial security.

Step 4: Revise Or Create Your Budget

Similar to making a plan to pay down debt, budgeting requires you to assess your current situation. Begin by tracking your spending. Bank statements, credit card bills and all other records of income and expenses will be needed.

Next, look for ways to trim expenses. Then, you can set your budget.

To help you, there are several free budget trackers, such as: GoodBudget, Honeydue, PocketGuard and more.

Step 5: Develop Multiple Streams Of Income – Side Hustles

There are a wide variety of ways to earn income on the side. Local and national websites offer opportunities for extra income. Most of these sites allow you to offer services ranging from writing and design to dog walking, furniture moving, household repairs, chores, child and elder care, taxi service, and food delivery.

Here are a few gig and freelance job sites:

Fiver
Upwork
Flexjobs
Rover
Taskrabbit
Care.com
Driving for Uber or Lyft
Food delivery for companies like Doordash

Step 6: Develop New Skills

One of the best ways to ensure job stability is to develop new skills. To do that, look for training opportunities through your employer, in your community, and online.

Your employer may offer training programs through the human resources department. That is a good place to start. Even if your company does not offer training resources, chances are that HR has a good idea of what is available in your area.

Your community may have a library, college, community college, or trade school. Any one or all of them can point you to courses or workshops that will make you a more valuable employee.

A variety of online sources provide access to training and courses to enhance your skill set.

One of the top free course providers is Khan Academy. Although Khan offers a lot of material for grade school through college students – it has an extensive career section. A non-profit, Khan also offers practice exercises along with its course work.

Sites such as Coursera, edX, Class Centraland FutureLearn offer courses from universities and other institutions. Some are free and some require a fee. Many offer certification.

Value of Learning

Even in good times, your career is probably your greatest financial asset if you are not retired. It only makes sense to invest in it.

“Wages tend to rise over time, and the more your skillset is in demand, the greater chance you have of growing your income and outpacing inflation,” Martha Callahan, CPA, CFP recently told Business Insider. “Becoming an expert in your field can also make you one of the last to get laid off.”

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