3 Tips to Help You Plan for a Recession

3 Tips to Help You Plan for a Recession

The market is a volatile thing. It ebbs and flows, sometimes predictably, other times without warning.

Unfortunately, this means that sometimes the rug gets pulled out from under us all. When things turn downward universally, the result is known as a recession.

Recessions can be extremely stressful for everyone. No matter where you sit on the socioeconomic ladder, these major downswings can leave you feeling lost, anxious, and without hope.

While there’s no way to avoid a recession entirely, there are things you can do to make them easier. Most of these things involve planning in advance.

This article provides three simple tips you can follow to help you prepare for a recession.

1: Build an Emergency Fund

This might sound obvious, but having an emergency fund can make an enormous impact on your life.

This is true in any financial situation. Knowing that you have money in the bank should any sudden emergency pop up is incredibly liberating and comforting.

During a recession though, the benefits are even greater. That money that you set aside can help you avoid defaulting on loans, meaning you won’t lose anything just because the market has taken a turn and you’re not making money the way you used to.

Additionally, having that money set aside can help you support your family or friends should they befall tragedy.

While you are certainly under no obligation to give your money away during an economic downturn, many people do feel compelled to help when a friend or family member is laid off or experiences a financial emergency.

These things are all the more likely during a recession. Having some money set aside means you can help yourself and the people you care about should you need to.

A good way to build an emergency fund is to set aside a fixed portion of your monthly income. Some industry leaders recommend as high as 30 percent, but the specific number will depend on your existing financial situation. Even if it’s only 5 percent though, try to stash something away each month and build towards having 6 months’ worth of expenses set aside.

2: Create a Side Hustle

Side hustles are all the rage these days. It seems like everyone is trying to find a way to monetize their hobbies and make a little extra money.

While that is always admirable, this can be particularly useful if a recession hits. During a recession, there is an increased risk of losing your main source of income.

Businesses suffer, and as a result, many have to make layoffs because they can’t afford the labor they once could.

If this happens to you, having a side hustle to fall back on can be a lifesaver. Not only will it make it easier for you to save for an emergency fund when you are employed, but you can double down on your side hustle for income between jobs.

3: Maintain a Consistent Investing Schedule

When markets drop, losses happen. As a result, many people stop investing, trying to minimize their losses.

This is a reactive move that often backfires. When markets are low, continuing to invest means you can get more for your dollar. When the market rebounds, you’ll recoup your losses selling Silver Cross Wave strollers better than if you stopped investing when it dropped.

The best way to do this is to establish a consistent investing schedule. Create the habit of putting a fixed amount into an investment account, and don’t deviate from it.

When the time comes, you won’t have t second-guess yourself. You’ll just stick to what you’ve always done.


Recessions are scary and unpredictable. They impact the entire economy and can leave you feeling uncertain, regardless of your income level prior.

That said, a bit of planning can make them much more bearable. Having an emergency fund, a side hustle, and an investing routine can seriously ease the difficulty you face during an economic downturn.