Many news stories suggest the US may enter a recession due to international tariff uncertainty. An economic downturn may or may not happen, but one can always get organized.

Preparing for a recession involves enhancing financial stability and minimizing vulnerability. Here are some practical steps you can take:

1. Evaluate the Strengths of Your Income Streams

• Consider whether you work in a recession-resistant industry. Don't make a change; just be aware.
• If you're contemplating a job change, think carefully; switching to a less secure position may not be wise.
• Remember that Social Security benefits and pensions provide a stable monthly income.

2. Solidify Your Emergency Fund

• Aim to save 3–6 months' living expenses in a high-yield savings account. This fund is a financial cushion in case you lose your job or encounter unexpected expenses.

3. Reduce Debt (Especially High-Interest Debt)

• Prioritize paying off high-interest credit card debt and personal loans.
• Avoid taking on new debt unless it is essential or part of a strategic move, such as refinancing.

4. Cut Unnecessary Expenses

• Reassess your subscriptions, dining habits, and discretionary spending.
• If necessary, create a bare-bones budget to understand your financial situation with minimal expenditure.

5. Stay Invested, But Smartly

• Avoid panic-selling your investments unless required by your circumstances.
• Down markets can be a good time to reassess your risk tolerance and asset allocation strategy.
• Maintain a long-term perspective.

6. Stay Informed and Think Differently 

• Approach news consumption with an open mind, observing rather than reacting. Remember that you cannot control macro-level events. For example, if you fear a recession is coming, consider the potential benefits (Recessions are Bad, But Not All Bad).

By implementing these strategies, you can better prepare yourself for economic uncertainty.

Laws, rules, and strategies are constantly changing. This online knowledge base doesn’t consider every situation. You must ask questions and get answers from your financial advisor.

The materials in this knowledge base should not be considered an offer or solicitation to buy or sell securities, nor shall any such security be offered or sold to any person in any jurisdiction in which such an offer, solicitation, purchase, or sale would be unlawful under the securities laws of such jurisdiction. Products and services mentioned are subject to change without notice.