I'm Not Worried About a Recession in 2023. Here's Why

It's something I refuse to lose sleep over.

Will a recession hit in 2023? That's the big question.

For months, economists have been warning that things could take a notable turn for the worse next year as the Federal Reserve moves forward with aggressive interest rate hikes. As borrowing becomes more expensive for consumers, they may look to cut back on spending to a drastic degree. And if that happens, it could easily spur a recession.

But while the idea of a recession is far from comforting, it's also not something that's keeping me awake at night. Here's why.

1. We're not guaranteed to have one

While it's easy enough to make the case for a near-term recession, the reality is that today's job market is very strong. And it may be strong enough to withstand a moderate pullback in consumer spending. To put it another way, there's a chance a recession won't hit in 2023, so I figure it doesn't pay to actively spend time worrying about one.

2. Recessions are somewhat normal

A recession may not be a welcome event, but an upcoming one wouldn't be a once-in-a-lifetime occurrence. The National Bureau of Economic Research says there have been 10 recessions since 1945. That's a recession once roughly every seven to eight years. As such, it's reasonable to expect to live through a number of economic declines.

3. I have the option to cut back on spending

I'll admit it -- these days, I spend more money than I need to. To be clear, I generally manage to put money into my savings every month and I don't come close to spending all of my income (unless unplanned bills, like home repairs, creep up on me). But there are definitely expenses in my budget I can cut back on if I had to.

Right now, I'm not doing much to cut back because I'm saving money consistently. If a recession were to hit and my income declined, I'd need to rethink my leisure spending. But that's not as stressful a notion as worrying about how I'll pay my mortgage.

4. My emergency fund is solid

In the wake of the pandemic, many financial experts have upped their emergency fund recommendations from three to six months' worth of living expenses to eight to 12 months' worth. But here's the thing -- I've always been a fan of having extra money in savings, so even prior to 2020, I made a point to maintain a 12-month emergency fund.

Because I have enough money in the bank to pay for an entire year of living costs, I don't have to worry as much about losing my job for a period of time. To be clear, I'd be devastated if that were to happen -- but I'd also have many months to seek out employment before having to sell off investments or resort to going into debt to stay afloat.

Try not to panic

It's hard to stay calm when you keep hearing how the economy could soon take a major turn for the worse. But rather than losing sleep, try taking active steps to better your financial situation so you're equipped to handle a recession. That could mean boosting your savings, paying off high-interest debt, and growing your job skills so that if layoffs come down the pike, you might manage to avoid landing on the chopping block.