- Many experts believe we're headed for a recession.
- JPMorgan CEO Jamie Dimon has a particularly negative outlook.
- You can prepare for the worst by padd your savings, cutting needless expenses, and perhaps adding to your income with a side gig.
Talk about a dire warning.
Will a recession hit in 2023? That's really the big question, and many experts are convinced that economic conditions are about to decline in a serious way. That could result in widespread layoffs and a world of financial distress for many people.
In fact, if you ask JPMorgan CEO Jamie Dimon what's in store for the economy, you may not like the answer. Recently, Dimon told lawmakers they should "be prepared for the worst" as far as the economy goes.
This isn't the first time Dimon's warnings have been notably dire. But it pays to do what you can to prepare for a recession in the coming year -- whether it's a short-lived one or a long, painful one.
Shore up your savings
One of the best things you can do to gear up for a recession is to boost your emergency savings. At a minimum, you should make a point to have enough money in your savings account to cover a full three months of essential living expenses. But that's really the minimum. And if you want better protection, aim for six months to a year's worth of bills.
Now, a 12-month emergency fund might seem rather excessive at first. But remember, if a recession hits, it could be over quickly, or it could be prolonged. And there's really no way to know. So if you manage to sock away enough money to cover a full year's worth of bills, you'll have less to stress over if you wind up losing your job and it takes you a while to become gainfully employed again.
Dump needless expenses
The more superfluous expenses you manage to drop, the more money you'll free up for your emergency savings. Plus, since a recession could hit and impact your income, it's not a bad idea to get used to the idea of spending less.
Think about the different things you pay for on a regular basis. You might enjoy a $15 streaming service and watch it every night, so that's a bill you should keep. But if you barely watch cable, cut the cord.
Get a second job
A side hustle could be your ticket to growing your savings ahead of a recession. But it could also serve as a backup source of income in case you end up losing your job.
Let's say you start out working 10 hours a week on a side gig while you're also employed on a full-time basis. If you lose your job in 2023, you may have the option to ramp up your side hustle to 25 hours a week, thereby compensating for a lot of your lost income.
While Jamie Dimon has made multiple predictions about a painful recession, the reality is that we don't know what the next 12 months have in store for the economy. But if you want to worry less about a downturn, do what you can to prepare for one while the economy is still in a pretty solid place.
Our picks for 2024's best credit cards
Our experts carefully review the most popular offers and select those that are worthy of a spot in your wallet. These standout cards come with fantastic benefits like generous sign-up bonuses, long 0% intro APR periods, and robust rewards.
Click here to learn more about our recommended credit cards
Our Research Expert
We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.
The Ascent is a Motley Fool service that rates and reviews essential products for your everyday money matters.
Copyright © 2018 - 2024 The Ascent. All rights reserved.