It’s Time To Proactively Manage
Your Personal Finances

According to the National Bureau of Economic Research, an economic expansion lasts on average just over three years. In January, our economic expansion celebrated the 11-year mark and there has been a flurry of talk about the possibility of a recession. Nobody can say for sure when the economy will turn south, so the best strategy is to be prepared for whenever it might.

Who knows what might go down in a recession? Job loss could be critical if you’re already stretched with student loans or other debt. Hopefully, you have savings to keep you afloat. If not, credit cards might prop you up, but is an option that should be considered carefully.

Here are some tips to help you stay proactive about your finances—and maybe even thrive—in the face of a possible recession. If you’re looking for more thoughtful money advice, like how to manage your money in the gig economy, the best B Corp banks, and socially responsible investing platforms, check out our Mind Your Money series.

1. Build an emergency fund

Have cash set aside to help you make it through an extended period of joblessness. An emergency fund is money to fall back on when you need it. Even if you don’t lose your job, credit can be tough to come by during a recession. An emergency fund can also come in handy if you have an unexpected expense like a medical bill, car repair, or need to replace a major appliance. Understand that you may not have your go-to; the bank of mom and dad or friends and family might also have their own financial issues.

What do the financial pros suggest? Work to have at least three to six months of expenses saved. Reality check: I have a snowball’s chance in hell of doing that, but I’m not letting that stop me. I’m doing the best I can, saving a little something-something every week. Remember, anything beats zero. Do what you can.

Work to have at least three to six months of expenses saved.

2. Get debt under control

Having fewer debt obligations will reduce your stress if money becomes tight during a recession. Find out how much you owe on all of your accounts, and make a plan for paying down or paying off debt. 

Consider the avalanche method for paying down debt, where you make minimum payments on all your bills and use any remaining money to pay off the debt with the highest interest rate. Or do the snowball method, which means paying off the smallest debts first and then moving on to the biggies. I like the snowball method because there’s sweet, sweet satisfaction when you can kiss a bill goodbye. The relief is invigorating and motivates you to hit the repeat button and wipe out the next one.

3. Rethink expenses

Review all of your expenses and cut out the BS. Put yourself on a budget. Maybe you’ve got a sense in your head of how much money you have coming in and going out, but this is no time for guesstimating. If you’ve been spending willy-nilly, make changes. Reevaluate even needed expenses, and do the math to see if it’s worth it for you to refinance your mortgage if you own your home. Rose suggests looking at your insurance policies and seeing if you can lower your premiums by comparing rates between competing companies and picking the lowest rate.

Maybe you’ve got a sense in your head of how much money you have coming in and going out, but this is no time for guesstimating.

Cut your grocery bill by shopping at wholesale clubs where the cost of a membership pays for itself as you save on groceries. Eliminate eating out as much as you can, and when you do, eat at places that are inexpensive or offer coupons and specials that help you save. 

Separate wants from needs. I’m a social butterfly, but if I’m in a miserly mood I make plans during happy hour, look for a matinee, or choose to watch something online instead. Better yet, I enjoy hanging at friend’s homes, because it’s cheaper and more personal.

4. Up your professional game

When the economy is humming and you’re comfy in your career, chances are you’re not surfing the net looking for your next big thing. But the truth is, all bets can be off in a recession. While you have the income to spare, invest in professional resume writing services, career coaching, or classes to enhance your skills.

Invest in professional resume writing services, career coaching, or classes to enhance your skills.

Look in the mirror of your mind. How vulnerable are you at your current job? “Are you essential? If not, how can you make yourself essential?” asks Leah Bourne, editor of The Money Manual. “Rejigger your job now if you can, to make yourself essential as you prepare for potential future layoffs. It’s also the time to network like crazy. Don’t panic thinking about potential future layoffs, but it’s important to think about next steps in case you do.”

I’m spending a bit more time and money attending networking events. As a freelancer, it’s all about relationships. I consider this an investment in myself and my business.

5. Boost income

Get while the getting’s good. Right now, grab opportunities to make money. Maybe you get a side hustle, work part-time, or take on extra hours at your job. Anything you can do to shore up savings is a smart move.

For me, that means not turning down any assignments right now. Even if it’s hectic, I’m like the worker ant, storing up for winter. One thing to keep in mind: There’s no such thing as a free lunch. If you have freelance income, you’ll need to report it and pay taxes. Talk to an accountant about estimating quarterly taxes so you don’t get hit with a huge tax bill later.

6. Don’t panic

In the long term, the journey your investment portfolio takes isn’t as important as the amount you’ve accumulated in the end when you need it. If you don’t need the money within the next five years, you shouldn’t be worried about day-to-day changes in your account value. If you do need the money soon—you really shouldn’t be invested in the stock market in the first place.  “What’s more important is the amount of time you’re invested in the market, [rather] than timing the market,” says Matt Elliott, a certified financial planner.

The short answer to the question, “Should I really invest (or stay invested) when the sky is falling in the news and might cause my investment to go down?” is yes, he says.

Iffy about your asset allocation? Seek advice from a financial advisor.

If you’re investing right, it won’t matter. “If you have the right asset allocation in place and are aware of, and comfortable with, the amount of risk you’re taking, what the stock market does in the short term should be irrelevant to you,” says Elliott. Iffy about your asset allocation? Seek advice from a financial advisor. What you don’t want to do is sell stocks in a down market and lock in losses.

Says Elliott, “Nobody can predict the stock market (despite what media/society helps people believe). Focus on what you can control—a long-term, risk-aware investing plan that you can sustain through a down market.”

I’m trying not to lose my mind wondering about what might go wrong if the economy turns south. I have memories from 2008. Work dried up big time. One faithful client went from $1,800 a month to $600, and then to $300 before stopping altogether. This reminder encourages me to keep hustling.

7. Turn trouble into triumph

Recessions can be times of great prosperity, for the prepared. If you’re sitting pretty with cash, you’ll be in a good position to snatch up goods in fire sales, be it real estate, stocks or art. That prospect is another reason to salt away money. And you don’t want to stash the money in your mattress—go for a high-yield savings account.

What are your most pressing questions about personal finance? 💵 Let us know in the comments below!


Sheryl Nance-Nash is a freelance writer specializing in travel, personal finance and business. Her travel writing has appeared on, Afar, ShermansTravel, Orbitz,, Fodors, Newsday, Business Insider among others. When she’s not encouraging people to spend money wisely, she travels the globe to satisfy her wanderlust and to inspire others to do the same!