The key to riding out a recession starts with planning for the worst-case scenarꦫio. Beyond that, there are several other things you can do to protect yourself against the sting of a recession.

These strategies can help you get through hard times ꦆin one piece.

1. Have an Emergency Fund

If you have plenty of cash (ideally 澳洲幸运5官方开奖结果体彩网🧸:three to 12 months of living expeꦚnses) stashed in a high-interest, 澳洲幸运5官方开奖结果体彩网:Federal Dep𓃲osit Insurance Corp. (FDIC)-insured account, your money will not only retain its full value in times of market turmoil but will also be extremely liquid, giving♔ you easy access to funds if you lose your job or are forced to take a pay cut.

Also, if you have your own cash, you will be less dependent on borrowing to cover unexpected costs or the loss of a job. Credit availability tends to dry up quickly when a recession hits. Once these things happen, use your emergency fund to cover necessary expenses, but keep your budget tight on dis🧸cretionary 💎spending in favor of making that emergency fund last and restoring it as soon as possible.

2. Live Within Your Means

If you make it a habit to live within your means each and every day during the good times, you are less likely to go into debt when gas or food prices go up.

Debt begets more debt when you can’t pay it off right away—if you think gas prices are high, wait until you’re paying a 29.99% 澳洲幸运5官方开奖结果体彩网:annual percentage rate (APR) on them by fueling up on a credit card.

To take this principle to the next level, if you have a spouse and are a two-income family, see how close you can get to living off of only one spouse’s income. In good times, this tactic will allow you to save a significant amount of money. In bad times, if one spouse gets laid off, you’ll be OK because you’ll already be used to living on one income. Adding to your savings will stop temporarily, bu🐻t your day-to-day lifestyle can continue as normal.

3. Have Additional Income

Even if you have a great full-time job, it’s not a bad idea to have a source of extra income on the side, whether it’s some consulting work or selling collectibles on eBay. More jobs mean more job security. Diversifying your streams of income is at least as important as 澳洲幸运5官方开奖结果体彩网:diversifying your investments.

Once a recession hits, if you lose one stream of income, at least you still have the other one. You may not be making as much money as you were before, but every little bit helps. You may even come out the other end of the recession with a growing new business as the economy turns up.

4. Invest for the Long Term

So what if a drop in the market brings♓ your investments down 15%? If you don’t sell, you won’t lose anything. The market is cyclical, and in the long run, you’ll have plenty of opportunities to sell high. In fact, if you buy when the mark𒊎et’s down, you might thank yourself later.

That being said, as you 澳洲幸运5官方开奖结果体彩网:near retirement age, you should make sure that you have enough money in liquid, low-risk investments to retire on time and give the stock portion of your 澳洲幸运5官方开奖结果体彩网:portfolio time to recover. Remember, you don’t need all of your 澳洲幸运5官方开奖结果体彩网:retirement money when you retire—just a portion of it. It might be a 澳洲幸运5官方开奖结果体彩网:bear market when you’re 66, but it could be a 澳洲幸运5官方开奖结果体彩网:bull market by the time you’re 70.

5. Be Real About Risk Tolerance

Yes, investing gurus say that people in certain age brackets should have their portfolios allocated a certain way, but if you can’t sleep at night when your investments are down 15% for the year and the year isn’t even over, then you may need to change your 澳洲幸运5官方开奖结果体彩网:asset allocation. Investments are supposed to provide you with a sense of financial security, not a🐼 sense of panic.

But wait—don’t sell anything while the market is down, or you’ll set those 澳洲幸运5官方开奖结果体彩网:paper losses in stone. When market conditions improve, it’s time to trade in some of your stocks for bonds or some of your risky 澳洲幸运5官方开奖结果体彩网:small-cap stocks for less volatile 澳洲幸运5官方开奖结果体彩网:blue-chip stocks.

If you have extra cash available and you want to adjust your asset allocation while the ma🅷rket is down, you may even be able to profit from infusing money into temporarily low-priced stocks with long-term value. Buy low so that you can sell stocks high later or hold on to them for the long run.

Be careful not to overestimate your 澳洲幸运5官方开奖结果体彩网:risk tolerance, as that will cause you𝐆 to make poor investment decisions🦩.

6. Diversify Your Investments

If you don’t have all of your money in one place, your paper losses should be mitigated, making it less difficult emotionally to ride out the dips in the market. If you 澳洲幸运5官方开奖结果体彩网:own a home and have a 澳洲幸运5官方开奖结果体彩网:savings account, you alreaꦬdy have 🃏a start: You have some money in real estate and some money in cash.

In particular, try to build a portfolio of investment pairs that aren’t strongly correlated, meaning that when one is up, the other is down, and vice versa (like stocks and bonds). This also means that you should consider 澳洲幸运5官方开奖结果体彩网:asset classes and stocks in businesses that 💖ar🌳e unrelated to your primary occupation or income stream.

7. Keep Your Credit Score High

When credit markets tighten, only those with excellent credit are going to get approved for a mortgage, a 澳洲幸运5官方开奖结果体彩网:credit card, or another type of loan. Things like paying your bills on time, keeping your oldest credit cards open, and keeping your 澳洲幸运5官方开奖结果体彩网:ratio of debt to available credit low will help keep your 澳洲幸运5官方开奖结果体彩网:credit score high.

The Bottom Line

There’s so much you can do to prepare for a recession. Build up your emergency fund, pay off your high-interest debt, do what you can to live within your means, diversify your investments, invest for the long term, be honest with yourself about your risk tolerance, and keep an eye on your credit score. And don’t forget to look for a side gig to keep money coming in.