Rising gas prices, interest rates, and layoffs are indicators that the economy may be headed for a recession.  The good news is that a recession typically lasts for six to twelve months. Below are a few tips depending on your stage in life that will help you prepare for a recession.

Young professionals (18-24 years old)

1.       Develop a budget. A budget will allow you to assess how you spend your money and prioritize essential expenses.

2.       Pay off consumer debt. Struggling to pay off debt during a recession can adversely affect your financial future.

3.       Develop multiple streams of income. Evaluate your interest and skills and develop active (e.g., delivery driver, freelance consulting) and/or passive (e.g., course creation, real estate investing income streams.

Career professionals (25-65 years old)

1.       Increase savings. Work towards developing an emergency fund for at least one year. 

2.       Keep bonds in your retirement portfolio. Bonds provide a buffer when stocks are performing poorly.

3.       Don’t try to time the market. Financial experts recommend to diversify your assets rather than making hasty decisions when the stock market is down.

4.       Refer to step #3 under “Young professionals (18-24 years old)”.

Retirees

1.       Pay down debt. Paying interest on loans will limit the amount of money you can place in an emergency fund.

2.       Stash your cash. Keep at least a year’s worth of expenses in your retirement account.

3.       Shift some assets into bonds. Review your asset allocation to ensure that you don’t have most of your assets in stocks that are likely plunging during a recession.