5 Key Steps Workers Are Making Today to Prepare for a Recession

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  • Many financial experts are worried that economic conditions will soon decline.
  • There are things you can do to set yourself up to get through a downturn. 
  • Cutting back on spending, boosting savings, and even adding a second job can prepare you for a potential recession. 

Are you putting any of these on your list?

Over the past several months, many financial experts have sounded a warning about an impending recession. The Federal Reserve has been raising interest rates in an effort to slow inflation. That could lead to a massive decline in consumer spending and a period of general economic unrest. 

A recent Clarify Capital survey shows that many workers are taking steps to gear up for a recession. Here are some of the moves they're making -- and why you may want to do the same.

1. Setting up emergency funds

If you don't have an emergency fund yet, stop what you're doing and open a savings account earmarked for unplanned bills. And then, do your best to contribute money to that account so you eventually build up a nice safety net. If a recession hits, your job could end up on the chopping block. And if that happens, you'll need money so you can cover your bills without immediately going into debt.

2. Adding more money to savings

If you already have an emergency fund, great. You're going to appreciate having that money if an unexpected expense arises or a recession leaves you out of a job. But adding to your savings could be a smart idea right about now. At a minimum, you should have enough money in the bank to cover three months of essential expenses, like food, transportation, and housing. If you're not there yet, it definitely pays to do what you can to add more money to your savings account.

3. Acquiring additional income streams

Losing your job could mean having to go without a paycheck for an extended period of time. It's a good idea to line up a backup income stream in case you're laid off. Right now, the gig economy is booming, so think about some of the jobs you can pick up on top of your main one that will help you boost your income. 

4. Cutting out impulse purchases

Impulse buys can be a huge budget-buster. And if you're trying to give your savings a lift, then it definitely makes sense to do your best to avoid them. One good way to do so is to make shopping lists before hitting the stores and only bring enough cash with you to cover those purchases. If you do that and leave your credit cards at home, you'll effectively take impulse purchases off the table.

5. Planning for a job change

In the aforementioned survey, many workers fear their companies will downsize staff in the event of a recession. If economic conditions deteriorate, you may be forced out of a job. So it's a good idea to work on boosting your professional skills so you have an easier time finding a new one. That could mean learning new skills specific to your role, or improving different soft skills, which are those that apply to any job and include things like time management and communication. 

We don't know for sure that we're soon heading into a recession. But it's a good idea to prepare for one just in case. And checking these items off your list could give you some peace of mind during these uncertain times.

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