7 Steps To Recession-Proof Your Finances

Are you worried about a recession? Some economists say there’s still a 35% chance it could happen in 2024.

People often ask us, “Will we have a recession?” The answer, of course, is “Yes.” We’ll always have another recession. The real questions are, “When?” and “Are you prepared for it?” If you’re not, now’s the time to get started.

So far, economic growth is still in positive territory and the unemployment rate remains relatively low. That’s a blessing. But since more and more indicators suggest the economy is slowing, it’s time to “recession-proof” your finances. How do you do that?

1. Check your credit score and get your credit reports. This will give you a base point and will allow you to accurately judge the effect of any late payments—if you’re forced to make any in the future. You can get a free credit report from each of the three bureaus, Experian, TransUnion, and Equifax, at AnnualCreditReport.com.

With those reports in hand…you’ll be able to show creditors that you’ve made timely payments on your various accounts in the past. That could help you negotiate better terms if you find yourself temporarily out of work. 2. __Familiarize yourself with the Mayday Budget. It has only four categories. The first is food. You have to eat, but keep it simple and avoid eating out. The next Mayday budget category is housing. Make your mortgage or rent payment. Then comes utilities, and finally, transportation. So food, housing, utilities, and transportation come first in the Mayday budget. With anything left over, you can pay other bills. 3. Look for other sources of help. If you lose your job, your unemployment benefits may run out, but other resources will probably be available. Check out non-profit organizations and local government agencies that may have assistance programs. You can call 2-1-1 to learn about services in your area or go online to 211.org. 4. Make a list of all your creditors and their contact information. Be ready to call them and explain in detail whatever financial situation you may be facing and then pray you don’t have to use it, but if you do, it’s ready. If you can’t pay a bill, call your creditor before it comes due. Run toward your creditors, not away** __from them.

When you call and speak to a representative, have your latest paystubs handy so you can show how your income has been reduced. Tell that person how much you have available to pay on the debt for the time being.

Ask if you can temporarily stop payments…or make partial ones. Let them know how long you expect to be in your current situation. You may not know for sure, but try to give a reasonable estimate of how long it will take for you to begin making full payments on time again.

Make sure you get the person’s name and keep a record of what you talked about and any agreement you may have reached. Also, ask to have a copy of the agreement sent to you in writing. Creditors will usually do this anyway…but ask for it just to be sure…and hang on to that email or letter when it arrives.

Sadly, you also need to be on the alert for scam artists who will use tough times like a recession to victimize folks already in dire financial circumstances. Do not respond to emails or give out information to anyone who calls you claiming to represent one of your creditors. Contact your creditors directly. 5. Get professional non-profit help for managing credit card debt. Contact our friends at Christian Credit Counselors if you start to fall behind in payments or expect you’re about to. They have arrangements with many creditors to lower your interest rates.

You’ll make one payment that covers several creditors, making things much simpler. It’s not debt consolidation, but debt *management. *It will help you pay off your creditors entirely up to 80% faster.

Also, if you’re laid off and lose your health insurance, check out Christian Healthcare Ministries. They offer a medical cost-sharing alternative to expensive health insurance, almost always at a much lower cost. 6. Save as much as possible now. We always tell you to have three to six months' worth of living expenses in your emergency fund for times like a recession. There’s no better way to recession-proof your finances than having money in the bank, so start saving today. 7. __Finally, pray. __Pray that God will provide wisdom for managing your finances in difficult times. James 1:5 assures us, “If any of you lacks wisdom, let him ask God, who gives generously to all without reproach, and it will be given him.” So those are the steps to recession-proof your finances. They’ll help you weather whatever economic storms come your way. You can also listen to the related podcast on this topic.