Building Financial Resilience Now. How to Prepare for a Looming Recession.

Many people are concerned that a major recession could be on the horizon in today's unpredictable economy. The chance of a major recession in the United States is a matter of debate among experts, but many agree it is higher than usual. 

According to Statista Research Department, it is projected that there is the probability that the United States will fall into another economic recession is 57.13%. This is an increase from the projection of the preceding month, where the possibility came to 47.31% percent. The U.S. recession probabilities are predicted a year in advance using the difference between 10-year and 3-month treasury rates. 

Some factors that could trigger a recession include rising gas prices, a hawkish Federal Reserve, a slowing economy, supply chain disruptions, and inflation.

Greenlight Capital's David Einhorn said on CNBC's "Halftime Report" he maintained his negative stance on the stock market as inflation and interest rates could shoot higher.

I think we're in a policy now, which is probably pretty good for Main Street, but it's going to be difficult and increasingly difficult for financial assets.

When you are preparing for retirement or have already retired, the economy and its impact on your savings is a significant concern. If you're lying awake at night worrying about your financial future, it's time to take action! 

For those over age 50, ensuring your financial situation is secure and prepared for a potential recession is essential. Creating an emergency fund, paying off debts, and diversifying your investment portfolio are proactive ways to prepare for economic uncertainty. 

Being proactive and building financial resilience is crucial to surviving—and even thriving—during an economic downturn. And even if we manage to avoid a recession, taking steps to secure your finances will set you up for long-term financial well-being in the face of an ever-changing economy. 

Purchase a Home Warranty

When a recession hits, the last thing you need is a major home repair expense. Consider purchasing a home warranty to avoid high repair and maintenance costs if something goes wrong with a home system or appliance. Home warranties are designed to cover repairs and replacements to items not covered by regular home insurance, such as breakdowns in heating, cooling, electrical, plumbing, and appliances. If you're looking for coverage options, this may help you decide!

Be Proactive About Long-Term Care Planning

Many people are concerned about retirement and what soaring inflation rates could mean for long-term health care affordability. With rising costs for essentials like groceries and housing, long-term care costs are also growing. Having a long-term care insurance policy can provide some invaluable peace of mind. It will ensure you can access quality care regardless of the economic climate. 

If you need money for long-term care right now, securing a reverse mortgage on your home may be a good idea by taking advantage of inflated real estate prices. 

Manage Your Debt

Managing debt is essential for financial stability in good times and bad. If you're worried about a recession, take care of your debt now! The Balance Money suggests first paying off high-interest debt, like credit cards, and avoiding new debt as much as possible. If you have multiple debts with high-interest rates, consider consolidating them into a single loan with a lower interest rate. This can help you save money on interest and make it easier to manage your debt payments. Establishing a household budget can help you prioritize your spending, cut unnecessary expenses, and ensure you're on track to pay off your debt as soon as possible.

Diversify Your Income Sources

Relying on a single income stream can leave you vulnerable to unexpected job loss during a recession. By diversifying your income sources, you can reduce your financial risk and create new income opportunities! Moves Financial suggests exploring multiple sources of income, such as starting a side business, freelancing, or investing in stocks. While diversifying your income sources can take time and effort, it can provide significant financial security and long-term growth benefits.

Fixed-interest investments, such as money market funds, can be a suitable way to prepare for economic uncertainty when interest rates are rising. If you are looking for a way to invest your money for a short period of time, you can also consider a 6-month CD. 

Maintain a Positive Attitude

The right mindset is critical to achieving and maintaining financial stability, especially if you're worried about a recession. Your attitude can influence your financial habits and decision-making. Try to stay positive, even if you're stressed about money. Maintaining a positive mindset will help you focus on your goals and avoid making impulsive financial decisions based on fear or anxiety. At the same time, be open to new opportunities and willing to adapt to changing circumstances. Flexibility is critical in uncertain times!

Economic downturns can happen anytime, and it's important to be prepared to maintain financial stability in the event of a recession. By taking steps to manage debt, diversify your income, plan for long-term care, and invest in asset protections like a home warranty, you can navigate these uncertain times with greater confidence and security.