The prospect of a recession can be scary, with people afraid of what it could mean for their jobs, incomes, and financial life. But, if you think a recession is coming, there are a few things you can do to prepare. Yahoo Finance Lead Banking Editor Casey Bond shares some tips in the video above.
To watch more expert insights and analysis on the latest market action, check out more Wealth here.
And so, Casey, for consumers who may be worried about a possible recession, what can they do to protect their savings?
Right. So, during a recession, having a solid financial safety net is key. Um, that means cash in the bank that's easily accessible without facing any um delays or penalties. So experts generally recommend keeping at least six months of essential expenses in an emergency fund. But if your income is variable or your job stability is looking a little shaky, it's better to aim for closer to 12 months. Um, you can automate your contributions to your savings account starting now so you can build that up over time. Um, and it's also a good idea to look at your budget, see if there's areas you can cut back, whether that's canceling a streaming service that you're not really using or even taking more drastic measures like relocating to a lower cost of living area.
And so what about your portfolio? How can you protect your investments?
So this is tough for a lot of people, but really, in a recession, it's important to stay the course. Um, selling off when you see your balance drop, uh, only locks in those losses. So, um, if you're uncertain about where your portfolio stands now, it's a good idea to maybe meet with a financial advisor and choose a strategy that works for the long term. Uh, remember recessions do happen even though they're very difficult to experience. They are a natural part of our economic cycle. So you should always be prepared and invested for the long term. Um, however, you can look at investing and moving some money into some somewhat recession-proof investments like dividend paying stocks and even gold, but the key is to invest for the long term, hold steady, don't panic.
And what are the credit card considerations that consumers, holders of those credit cards, should be keeping in mind if we did see and during a recession?
Well, credit card debt is not great to have at any time, but especially during a recession. And also during a recession, you know, lenders tend to tighten up um and offers such as 0% balance transfers, new cards become less available. So implementing a strategy to pay down your credit card debt now is a good idea. Taking advantage of those types of offers, um such as like a 0% card, can really be helpful. And if you do find yourself in the position where you're struggling to make your payments, reach out to your credit card issuer right away. They may have a hardship program available, um which can range from a short-term fix, like waiving some interest or fees, or maybe a long-term payment plan that's going to help you get back on track. But don't wait to ask for help.
Casey, thanks so much for breaking this down for us. Appreciate it.
Anytime, thanks.
