- Many experts fear that economic conditions will decline in 2023.
- While shoring up your savings could buy you some protection, there are other moves worth making as well.
It pays to tackle all of these in the near term.
At this point, many economists are convinced we're headed for a recession in 2023. Whether it's a short one or a long one is another matter of debate. But either way, it's a good idea to prepare for the possibility of an economic downturn -- even though a recession is by no means guaranteed to hit next year.
You'll often hear that the best way to gear up for a recession is to boost your savings. And that's great advice. But here are some lesser-known ways to prepare for a recession.
1. Network with people across your company
Sometimes, even highly skilled employees lose their jobs when a recession hits and layoffs come down the pike. But the more people you know at your company, the greater the chances of someone being able to find a job for you, or find a reason to keep you on, if layoffs become necessary. It pays to branch out within your company and start developing relationships with people on other teams -- even if you don't routinely collaborate with them.
2. Get yourself a side gig
Working a side hustle won't protect you from losing your job -- but it could protect you from having to deplete your savings in the event of a layoff. Let's say you take on a gig that has you earning an extra $200 a week. If you lose your full-time job in a recession, you may be able to continue working that side hustle (or even ramp up) while you search for a replacement job. And in that scenario, you'll have to pull less money out of your bank account to get by.
3. Shed some costly debt
As a general rule, it's a good idea to whittle down costly debt, like a credit card balance, to save yourself money on interest. But if a recession strikes, it could result in job loss. And while you may be entitled to unemployment benefits if you're laid off through no fault of your own, those benefits likely won't come close to replacing your missing paycheck in full. At that point, the last thing you'll want is monthly debt payments hanging over your head, so you're better off shedding that debt now if you can.
4. Work on boosting your credit score
If a recession hits and your job goes away, you may be forced to borrow money to get through a period of unemployment. This especially holds true if you don't have a whole lot of money in savings. That's why it's important to work on raising your credit score. The higher that number is, the more likely you'll be to get approved for a loan when you need one. And also, a higher credit score could result in a lower, more affordable interest rate on the sum you end up borrowing.
The idea of a recession can be scary -- there's no doubt about it. But these moves could set you up to better weather an economic downturn and come out unscathed.
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