3 tips to prepare in case of a recession

Even if a recession does not end up happening, the mere possibility of one is enough to stir up financial fears. When the economy slows down drastically, stocks can tank, loans can become more difficult to secure and job security can decline.

Lately, fears of a recession have ramped up, after President Donald Trump "declined to dismiss the idea that a recession could happen" during an interview with Fox News in March discussing the implications of the tariffs he is imposing, said Time. Amid the administration's economic policy moves, "Goldman Sachs has raised its 12-month recession probability from 15% to 20%, while J.P. Morgan's chief economist has upped the odds to 40%, a significant jump from the 30% prediction at the start of the year," said The Washington Post.

While there is no telling where the economy will head, there are steps you can take to ensure confidence in your own financial situation — no matter what lies ahead.

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1. Get any debt paid down

"High-interest debt — like credit card debt — can be especially difficult to shed when money is tight," said NerdWallet. This is in part thanks to interest, which can "pile up quickly, especially when interest rates are rising."

But a recession also brings with it the possibility of job loss, and "if you lose your job, you may have no choice but to focus on paying for essentials — a roof over your head and food on the table — not shelling out interest payments on unpaid credit card debt," said the Post. This can lead to a further interest pileup.

As such, it is worth assessing your debt situation sooner than later, whether with a balance transfer credit card or a debt payoff strategy like the debt avalanche method.

2. Double down on saving

Since a recession "can quickly change your circumstances," it is smart to have a savings cushion to fall back on, said the Post. Plus, "if you have your own cash, you will be less dependent on borrowing to cover unexpected costs or the loss of a job," which is especially helpful given "credit availability tends to dry up quickly when a recession hits," said Investopedia.

You will want to aim to have "three to 12 months of living expenses … stashed in a high-interest, Federal Deposit Insurance Corp. (FDIC)-insured account," said Investopedia. If your current savings balance is far from that, "ending unnecessary subscriptions or other forms of entertainment can help people supplement their emergency budget," said Time.

3. Avoid trying to get ahead of the stock market

"The urgency and panic of a recession can cause overwhelming distress, but you don't want that to influence your financial strategy," said Credit Karma. Instead, hold steady with what you have been doing, such as contributing to your retirement account and investing for the long term.

While it is "natural to want to sell during market drops," said NerdWallet, "when you sell shares as prices are falling, you lock in losses." But "if you don't sell, you won't lose anything," said Investopedia, and given "the market is cyclical ... in the long run, you'll have plenty of opportunities to sell high."