How To Recession-Proof Your Finances and Prepare For The Inevitable

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“A recession is coming”

I don’t know about you, but I’ve been hearing that for about 2 years now. From news analysts, economists, and even some prominent businessman, it seems like that is all we are hearing these days.

This talk is not only making the rounds on Wall Street but also on Main Street USA.

Yet, the economy keeps humming along.

Oh sure, there is high inflation right now, but jobs are plentiful, companies keep investing in themselves, and until recently the housing market demand far exceeds the supply.

So, are we really heading for a recession?

My answer to that is …… yes.

Why do I say that? Because it’s LONG overdue.  It’s not a matter of IF it will happen, but WHEN it will happen.

When that day finally arrives, you need to be prepared for it. Waiting until a recession happens is WAY too late. The time to start is NOW.

In today’s article, we’ll cover what is a recession, how long can it last, why we are overdue, when might it happen, and some things you can do starting today to recession-proof your finances.

What Is A Recession?

A recession is where there is a general decrease in economic activity. From an economist’s perspective, this is a negative growth rate in the nation’s Gross Domestic Product (GDP), which is the total value of what a nation produces, that lasts at least 2 consecutive quarters (or more).

Recently this happened in the U.S. economy, but analysts have hesitated to call this a recession.


What is a Recession

Because a recession also needs to consider other factors like the labor market, consumer/business spending, incomes, and industrial production.

In other words, defining a recession is a little more complex than just watching the GDP of a country.

I talk about how a recession impacts your finances here:

Usually when you think of a recession, 4 things typically happen:

  • High unemployment (pretty low right now)
  • Declining Wages (declining slightly due to high inflation)
  • Lower Housing Prices (price growth slowing down but definitely not going down or flat)
  • Stock market decline (that’s been going on all year).

Based on these factors, we’re not there yet.

You can think of a recession as a major storm coming your way. If you know a storm (i.e., tornado, hurricane, etc.) is coming you would reinforce the your home’s doors, windows, and roof before the storm hits, right? A recession is the same way.

If you know a recession is likely to arrive in the next 12-18 months, it’s important to take the necessary precautions in advance to protect your financial house.

If you don’t, you risk suffering severe damage to the house.

It’s wise to make sure you are prepared and there are smart steps that can be taken to benefit your finances both now and thru a recession.

How Long Can a Recession Last?

The good news is that recessions are a normal part of the economic cycle that comes and goes. On average, we experience a recession about every 5-7 years.

The duration of the recession is small. On average, a recession lasts about a year.

There are extreme cases where a recession lasts longer (i.e., think the Great Recession of 2008).

Historically speaking, those occurrences are rare.

The bad news is that we usually do not acknowledge a recession is occurring until either we are well into it, or the worst has passed.

Plus, we have not had a recession since the Great Recession of 2008. So, if a recession comes around about every 5-7 years and it’s been almost 15 years since the last one, you can see my logic why it might be arriving sooner rather than later.

That’s why it’s important to get ready NOW so you do not have to worry about it.

When Might A Recession Happen?

Good question. This is open to debate and discussion.

60% of the general population thinks there will be a recession sometime in 2023.

Interestingly and according to Magnify Money,  68% of U.S. adults do not feel ready for an economic downturn at all.

That’s not a good situation to be in.

The good news is you have time to get ready. However since 2023 has started, time is of the essence.

Taking the necessary steps to get started is easy and can be enacted today.

5 Things To Do To Recession-Proof Your Finances

Next, we’ll go through a few things you can do right now to get started.

Be Invaluable In Your Career

The toughest result of most recessions is job loss and trying to find a new job (or career) to earn a living.

Start now in your current job to work in an area that is valuable to the company’s future.

To keep yourself valuable and relevant, hone in on the important work skills critical for success at your job.

Don’t have those skills yet? Train yourself online via Coursera, LinkedIn Learning, YouTube, or Teachable.

Coursera has a plethora of courses to choose from for growing your skillset and is becoming the “Go To” place for employers to train their people.

5 Things To Do To Recession-Proof Your Finances

Don’t just focus on technical skills because soft skills are as important (if not more important) for a successful career.

In fact, 93% percent of employers say “soft skills” plays a critical role in hiring decisions.

Some of the most in-demand soft skills include communication skills, customer service, analytical thinking, scheduling / time management, etc.

Want to improve your communication skills? Join Toastmasters!

Not sure what Toastmasters is?

It’s a volunteer organization dedicated to the development of a person’s communication, analytical, and leadership skills. They also have a training program available that can help you on your journey.

I’ve been a member for over 10 years, and I can sum up my experience in 2 words…. GAME CHANGER!

I’ll write an article about my experiences in the future.

Boost Your Emergency Fund

It’s always a good idea to have an emergency fund in case the unexpected happens. With the threat of a recession looming, having a properly funded emergency fund becomes paramount.

Most financial advisors say you should have 3-6 months of living expenses available in cash or other liquid investments.

If a recession is coming, job cuts aren’t far behind. If that happens, you may need even more in the emergency fund because it could take months to find a new job.

I recommend having 6-9 months available in your emergency fund. That should be enough to weather any storm.

The key to building a large emergency fund is having your money work for you.

Most people think of the stock market for building an emergency fund, but in this case, it’s not a good idea. The reason is that in a recession, the stock market plummets and so will your emergency fund.

I have another alternative.

Ever hear of whole life insurance?  Whole Life insurance has many benefits including cash value. You can access this cash value while living and is tax-free.

The cash value grows at a rate of 4-6% (including dividends) annually no matter what happens in the stock market!

5 Things To Do To Recession-Proof Your Finances

The reason for this is that the insurance policy is a legal contract between you and the insurance company where they commit to giving you this rate every year no matter what.

I talked a lot about insurance policies and whole life insurance in the following articles:

Are Alternative Investments Right For You?

How Much Life Insurance Do I Need? – Part 1

How Much Life Insurance Do I Need? – Part 2

5 Ways To Create Your Own Pension

Need help finding a life insurance policy? Try Policygenius.

I found some great policies and rates for my wife and myself. Check it out!

If you decide to follow this path, think of the cash value in a policy as a “super piggy bank” for storing emergency money.


Most high yield bank accounts are only paying out about 2-3% in interest annually. It was not long ago (about a year ago) that high-yield accounts only paid out about 0.25% interest.

A whole life policy pays out WAY more than that every year and your cash will grow faster as well.

Don’t have enough money coming in right now and not sure where the money will come from?

Develop Other Income Streams

Now you can ask for a raise at your current job or move to a better paying job as well.

The downside to asking for a raise is that you may not get it.

Some employers (like mine) only allows pay increases 1 time each year unless you receive a promotion.

However, other employers in other industries are more generous with raises. Give it a try. Never hurts to ask because all they can do is say “no”….. just sayin’! 😊 lol

Moving to a new job with more pay is also a solution with a downside. If you are the new guy at a new company, you haven’t proven yourself in their eyes and that could put you at risk on being laid off.

Sometimes staying put is the way to go.

Even if you decide to do one of the things I mentioned above, I highly recommend diversifying your income streams now.

This can help you several ways:

  • Use the extra money now to build up your emergency fund
  • Use the extra money to pay off high-interest debt
  • Lean on the side hustle to supplement income during a layoff
  • Use income to fuel cash flowing investments (aka Velocity of Money)

Plus, when the recession is over, you can use the side hustle to speed up your journey to financial independence.

I talked a lot about the benefits of a side hustle here:

Want some ideas for starting a side hustle?

Here are a few:

The possibilities are literally endless.

Do you have other side hustle ideas? Leave your comments here.

Pay Down Debt

Once you have a solid emergency fund built up and some extra income coming in, now is the time to attack your debt.

1st off, pay down that high-interest debt (i.e., credit cards) as soon as you can. Speaking from experience, credit card payments can literally suck your free cash dry and leave you wondering what happened to all your money.

How To Prepare For A Recession

Paying down that debt can free up additional cash that you can re-allocate to further speed up debt repayment before a recession hits. Paying down debt can also reduce stress in a recession because you need a lower amount of money to live off. You can also re-invest the money to buy income producing assets (develop more income streams).

Whatever is chosen, paying down debt has many benefits.

Not sure where to start or how to prioritize debt to get the most bang for your buck?

Check out the articles I wrote below for more details and answers to your questions:

Find Ways To Stretch Your Money

Another way to save money in a recession is to find ways to make every dollar stretch. Practicing more efficient ways to spend money will help to lower your stress and improve your financial outlook in a recession.

Look for shopping discounts, buying groceries at an Aldi (if one is in your city), and even using your credit card rewards points for saving money and putting extra cash in your pocket (just be sure to pay it off EVERY month!).

 A great way to make your dollar stretch is to use rebate apps or money saving apps.

Here are a few examples:

On top of finding ways to save money, you can also renegotiate your monthly bills and loans to save money and make your dollar stretch farther.

Lastly, have you been receiving a large tax refund the last few years? Look into adjusting your W-2 exemptions so more money appears in your pocket now instead of after the tax season.

We did this and it put an extra few hundred dollars into our pocket each month! No kidding!


The name of the game in a recession is to protect your finances at all costs in the event of a job loss.

The rumblings of a recession started in 2022 and will probably occur sometime in 2023.

How To Plan For A Recession

If a recession happens, the best thing you can do to protect your finances is to prepare for it. If you don’t need it, great. Your life will be better off financially.

If you do need it, you’re sitting on solid financial ground. It’s win-win! 😊

I don’t know about you, but I would rather be prepared than having my world turned upside down.

Food for thought……

Live The Life You Love, Want, And Deserve! 😊


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