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How to Recession-Proof Your Bank Account

Besides ‘Already be rich’?

It’s coming. Of course it’s coming — it’s bound to, eventually. There have been 13 recessions since the Great Depression 90 years ago, but since the last recession utterly transformed our economy, upended a lot of lives and laid waste to pretty much all of our retirement plans, people are rightly panicking about the next one, whenever it hits.

Being prepared is a good thing — along the lines of that “fool me once” motto (the one that the last recession’s enabler-in-chief couldn’t even get right). So what can a regular old 99 percenter like yourself, who may not have much savings or any investments to begin with, realistically do? Financial planners will tell you one thing. Career coaches will tell you another thing. Psychologists will tell you something else. Here’s what we got when we put it all together.

The idea of trying to prepare for a recession seems kinda overwhelming.

It is — recessions suck. Some people survive them mostly unscathed, others lose a lot — job, home, savings, investments, you name it. The first thing to think about, according to CNBC, is to focus on what you can control. Which is also to say, forget about the things you can’t control and start with your own savings.

I assume saving money is a big one?

Yeah. Considering 40 percent of Americans don’t even have $400 in case of an emergency, saving even a little will put you in good company. As for how much, the Motley Fool recommends six-months’ worth, which is a lot of savings for most people — it includes the basics, like housing, utilities, groceries, insurance, car payments and all the other stuff you more or less can’t live without.

In the real world, you might not be able to save up six months worth of bill payments, especially if a recession hits soonish, but that’s okay, just save what you can. Whatever you have, you’ll benefit from it — your personal situation may differ anyway.

Also, remember: This is your safety net. Your lifeline. So be smart with it, and put it into its own separate savings or money-market account so that it won’t be easy for you to access. And don’t invest it — basically, don’t let there be any chance of losing it. Just as you wouldn’t lay your emergency money down on the blackjack table, nor should you do anything with this besides put it in a safe place for now. It’s okay that it won’t earn much interest — risk may equal reward, but you have no room to risk this stash of yours.

What about my debt?

Pay it off while you can, but you should do it strategically, according to The Penny Hoarder and other places. Start with the high-interest loans, like credit-card debt, because when money gets tight, the last thing you want to put your hard-earned savings toward is interest. If you can’t pay it all off soon, get a debt-consolidation loan, which you can find most anywhere — your local bank, the internet, pretty much every lending institution offers them. It turns your high-interest debt into a lower-interest debt.

I’m guessing trimming back on my expenses is going to be somewhere on this list?

That’s right. Pare down your expenses while you can, before you’re really forced to. See if you can live with one less streaming service. Try to eat cheaply by eating out less or adjusting your grocery-shopping habits toward cheaper foods, or ones that offer a better bargain. Or try shopping elsewhere. Basically, don’t waste money on stupid things! Maybe that even means downscaling your life a bit: Where you live, how you get around, that sort of thing. Those are big-ticket items! Any savings you can get from them makes it easier to hit that six-months’-worth mark. Or even deferring a vacation — which, certainly, can be hard in this Instagram epoch we live in. If you’re living beyond your means and racking up debt, make up your mind to live more within your means right now. You’ll be glad you did, and when the recession hits, you’ll be extra glad you did.

Also, if you currently have good health insurance, use it! See your doctor for a checkup, maybe get that strange thing you wonder about scanned or checked out. Elect to have that surgery if you’ve been putting it off. If you lose your job and your insurance, as they say, at least you’ll still have your health.

Speaking of which, what about my job?

The first thing that often comes to mind when you hear the words “recession” is all the news items of job losses. Here are some things you can do to hopefully avoid being one of the casualties, according to Forbes and elsewhere: In the here and now, make up your mind that you will become essential to your company. Be indispensable, the last guy they’ll want to, or feel that they can, let go. Basically, be the best version of yourself: Volunteer for projects, show up with the right attitude, be a model employee, kick ass.

While you’re doing that, think about the bigger picture: Would some extra training or certifications make your job more secure? Could it even get you a better job? Start making those moves right now, before the shit hits the economy’s fan. Along those lines, keep your resume up to date. Send it out for the hell of it. Unemployment is extremely low right now (although that, of course, depends very much on your definition of “employment”), so in theory, now’s a good time to scout out new opportunities, rather than waiting until the recession hits and millions of other people are fighting for their lives for a job — any job.

Anything else I can do?

Yeah, ever thought about a side gig? Black Enterprise suggests that you do. No matter what it is, pursue it. Maybe being an Uber driver isn’t for you; luckily, there are a million other side hustles: Freelance your coding skills. Your painting abilities. Your handiwork. Become an artist in your spare time. Be a Goddamn influencer if you must. Figure out what you can do in small bursts of time that’s either fulfilling or enriching (literally), and get started. It’s extra income for now, and who knows what it might lead to? 

How do I prepare for a recession if I have investments?

If you have a 401(k), 529, IRA or any kind of investment, the standard safety move is to move some of your stock investment into something safer, like bonds. But unless you’re nearing retirement age, what might be a better idea is to adjust your investments for the long term. You see, lots of people sell during a recession, which is a silly time to do so. The value has already decreased for now! Stocks always rebound and eventually surpass the previous high-water mark in value, and the point of investing for your own retirement or your child’s college is the long term, which means you’ll need to ride out a few bumps in the road. So by all means, invest in the stock market — just do it wisely, for the long term, with the help of a professional and don’t panic when your stocks take a hit during the next recession. Just as during all recessions, prices will surely increase again at some point. Don’t think of it as buying and selling, think of it as buying and holding.

Sounds like I’ve got a lot of work ahead of me.

Yes — but if you do all this ahead of the next recession, as the saying goes, you can’t get fooled again… or something.