3 Smart Money Moves to Make Before a Recession Hits

No one can predict exactly if (or when) a recession will hit -- but you can always be prepared for one.

Economic slowdowns often come with job losses, tighter budgets, and more financial stress. The good news is that a few smart, simple money moves can give you a stronger cushion if things get rough.

Here are three steps that can help protect your finances before a downturn begins.

1. Build a (high-APY) emergency fund

When it comes to protecting yourself from financial disaster, building up your emergency fund is crucial.

At any given time, you should aim to have three to six months' worth of expenses in your savings. If you spend $4,000 a month, for example, you'll want to have $12,000 to $24,000 saved up.

Not-so-fun fact: During the Great Recession, millions of Americans were unemployed for six months or more. If you lose your job during a recession, an emergency fund could allow you to weather hard times without going into debt.

To get even more out of your emergency savings, consider moving your cash to a high-yield savings account (HYSA). Top online banks are offering APYs as high as 4.40% -- that's more than 10 times the national average of 0.38%, and it can mean hundreds more in interest per year.

2. Make a recession-friendly budget

Next, review your monthly budget and cut any non-essential expenses. Focus on things you need like rent, groceries, and transportation, and cut spending on dining out and entertainment. (Many of these tips go hand-in-hand -- spending less on things you don't need will mean you can contribute more to your emergency fund).

Start by tracking what you spend now, then identify where to cut or scale back. Use a simple budgeting app, or even just a simple spreadsheet. The goal here is to stay flexible and keep money in your pocket for when you really need it.

3. Pay off your high-interest debt

High-interest debt, especially credit card balances, can become a massive burden during a downturn. Interest rates on credit cards can be 20% or higher, meaning your balances can grow fast and send your finances into a downward spiral.

Work to pay off these debts as soon as possible. Prioritize the highest-interest accounts first while making minimum payments on others, then slowly work your way down.

Another smart option: moving your balance to a credit card with a 0% intro APR. These cards offer 0% intro APR periods as long as 21 months. That'll give you time to pay down what you owe without racking up more interest charges.

Check out one of my favorite balance transfer cards, with a long 0% intro APR on both purchases and balance transfers, to start saving today.

Stay ready so you don't have to get ready

We don't know where the economy is headed in the near future, but there will be another recession at some point -- whether that's in three months or 30 years from now.

Start by building your emergency fund so you have a buffer if your income takes a hit. Then, look for ways to trim your spending and create a budget that can handle a downturn. Finally, take aim at high-interest debt, especially credit card balances that can get more expensive over time.

These three simple steps can help you stay on sound financial footing -- no matter what the economy does next.