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You’ve worked hard to earn your money, so naturally you want to grow your earnings and protect them when you can – particularly from bad economic news like a recession.

Recessions are a normal part of the economic cycle. They happen when we experience two or more consecutive quarters of reduced overall economic activity. That reduction leads to job losses, home foreclosures, and a lot of uncertainty that can hit close to home, just like what happened during the Great Recession of only a decade ago.

Even though we can’t tell when or if the next recession will happen, or how long it could last, we can prepare for that possibility. And being prepared is a win-win situation: You can ride out a recession with less personal financial impact, and you can be fiscally stronger if a recession does not occur. These tips will help you prepare, just in case.

1. Build an Emergency Fund
Most experts recommend creating an emergency fund with three to six months’ living expenses set aside in case you lose your job or have unexpected expenses to cover. An emergency fund is especially comforting in the face of troubling news about the world economy. Choose an account that pays competitive dividends like American Heritage Credit Union’s High-Yield Savings Account. Avoid touching this savings for anything except a true emergency.

2. Pay Off High-Interest Debt 
Equally important as an emergency fund, paying off debt – especially high-interest credit cards – benefits your bottom line. Set a goal to pay off your full card balance each month. If you can’t pay off excess credit card debt quickly, consider other relief options, like:

• Transferring credit card balances to American Heritage’s low-interest credit card, which offers a special introductory APR and an everyday low APR after that
• Consolidating multiple balances with a low-rate personal loan
• Refinancing your auto loan from another lender with a shorter term, lower-rate auto loan
• Turning to an expert for help with paying down debt; our partnership with Clarifi can help you get the guidance you need

3. Downsize Your Budget 
List all your monthly expenses and see what you can trim to live more frugally, like cutting cable, dining out less frequently, cancelling unused memberships/subscriptions, and buying generic brands. Use a tool like My Money Manager, which lets you see all your accounts together in real time, helps you make a budget, and helps you create and follow a plan to pay down debt. You could also create a ‘doomsday budget’ that focuses exclusively on critical expenses and absolute essentials.

4. Review Your Investment Portfolio
Take a look at your portfolio of investments and determine how resilient it would be if a recession happens. If you’re near retirement, you might want to rebalance your portfolio to manage potential risk. If you’re younger and decades away from retiring, a more aggressive portfolio will have time to recover any losses. Regardless, diversifying assets into different places like savings, stocks and bonds, and a balance of other industries/sectors will help you ride out market dips more comfortably. At American Heritage, our team can help you plan and save for the future. Consider certificates/IRA certificates, which are insured, not affected by the stock market, and offer a smart way to add stability to your growing nest egg.

5. Keep Investing in Your Retirement
Contribute to your IRA or 401(k) even if a recession is looming or hits. A 401(k) is a long-term investment that will survive and recover from a recession – so stick with it if you’re still years away from retiring. If you’re close to retirement, talk to fund managers or your financial institution about moving money into safer low-yield funds or bonds.

6. Cultivate Additional Income
Even when you’re working a full-time job, you might find ways to generate income on the side. Whether it’s selling collectibles, offering consulting, or even driving for Lyft or Uber, use that extra cash to pay down debt or pad your emergency fund.

7. Think Long-Term
Think carefully before making a change that could make your long-term financial security more vulnerable. Thinking about moving across the country? Starting a new career? Returning to school? Retiring in a few years? Factor in your financial needs as you make long-term plans. An uncertain economy shouldn’t stop you from pursuing your goals, but it should be taken into consideration.

8. Invest in Your Employment Value 
For some jobs (and some high-value employees), recessions may pose less of a risk. Take advantage of training and certification opportunities to expand your skill set and increase your marketability if you do lose your job. Cultivate a network with others in your field, and keep your resume updated.

PLAN FOR THE UNEXPECTED

Unfortunately, even the best economists don’t have a crystal ball that lets them look into the future and predict the economic outlook or next recession with 100% accuracy. There’s never a bad time to evaluate your finances and do a gut check. If you’re a little nervous that you’re not secure or prepared enough, taking steps to strengthen your position will help you sleep better at night, now and during a recession.

It’s a smart move to rely on a dependable financial institution no matter what the economic outlook may be. Putting your trust in American Heritage, founded in 1948, means you’ll benefit from the expertise and experience of one of the 100 largest credit unions in the United States.