Worried About A Possible Recession? Here Are 5 Smart Money Moves to Make Now

By Gretchen Meyer, Financial Consultant, Owner, and President of Pachira Wealth Management

As a longtime financial consultant and private wealth advisor, I’m well-practiced at supporting my clients through every kind of economic circumstance. The truth is, the economy is cyclical, and what goes up must come down. In times of uncertainty, people need sound advice from professional advisors, and I feel privileged to be an experienced guide for people looking to preserve their wealth and their confidence.
If America does experience a recession this year, these are my top tips for preparing for that challenge, and seeing it through until better times prevail.

1. Don’t Panic! Easier said than done, I know, especially in a world where bad news will always make headlines. But it’s important to hold off from making any rash, emotional decisions with your money. Making sudden moves can hurt your portfolio. Keep a long-term perspective, and remember that some of the best days in the market follow some of the worst. In fact, major “down years” for the S&P 500 are very rare. Since 1960, there have been only 5 years where the Index went down more than 15%. This is the time to call your experienced financial advisor, express your concerns and goals, and listen to their advice and counsel.
2. Build an Emergency Fund. This is tried and true financial advice (in good times and bad) for a reason. Having 3-6 months of living expenses saved up for a rainy day is like weaving your own safety net. You're preventing potential stress in your future, and giving yourself confidence today. If you are single, it’s wise to air more on the 6 months side of things. If this feels like a hard-to-reach goal, start small, conserving a doable amount from each paycheck, and research high yield savings accounts or money market accounts that will earn the most interest and allow your money to grow as it stays safely stored away.
3. Review Your Budget. This step is an important part of building an accurate emergency fund. Look closely at your budget to define your fixed expenses (mortgage, car payment, healthcare costs) versus your flexible expenses (subscriptions, streaming services, dining out, etc.). Do this with an eye to understanding what expenses you can cut from your budget quickly should you need to. This is also a good time to shop around for cheaper rates on insurance, and look for any overlaps in expenses. By determining what is discretionary versus necessary, you can hone in on your budgetary goals.
4. Take Control of What You Can in Terms of Job Security. Layoffs are a painful part of economic downturns. While you ultimately can’t control whether or not your job is on the chopping block, there are steps you can take to set yourself up for success if the worst happens. Take some time now to refresh your resume, update your LinkedIn, check in with your references, and network with peers and colleagues. Being proactive and prepared when you can't control the ultimate outcome is savvy and smart, and can also make you feel empowered and strong.
5. Check Your Credit.  Again, this is always a wise thing to do, but in times of uncertainty, you can examine your credit with an eye to opportunities. The time to apply for any loan is when you are gainfully employed, and your credit looks great. You can apply for a Home Equity Loan as a safety measure for readily available money. You don’t have to use it, it doesn't cost anything, and it doesn't depreciate. Home Equity Loans turn the value of your property into a liquid asset that you can reach for in times of need.

Remember, recessions always end. Taking the time to cover your bases can be a real comfort if your financial anxiety is increasing. Financial consultants like me are here to listen to your worries, make sound plans for every eventuality, and steer the ship skillfully through the storm.

Securities and advisory services offered through LPL Financial, a registered investment advisor, Member FINRA/SIPC.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.