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5 Ways to Insulate your Finances Before a Recession


As leaves start to turn in the clear, crisp, pumpkin spice-infused air, we feel autumn’s steady return. The daylight hours will wane. The last few flowers of summer will fade. A general sense of time slowing down will fall over us like a heavy blanket while nature’s cycle makes one more revolution. Oh, and the combination of accelerated world-wide inflation, an energy crisis exacerbated by Russia’s invasion of Ukraine, and a radical new incarnation of labor models coming on the heels of the worst epidemic in many years means only the uber rich have robust financial security as we brace for impending recession.

Now, let’s all take a breath. Current events are certainly throwing new wrinkles into our seasonal financial strategies, but we’ll break down some smart ways to move forward. Examining the individual financial levers we can pull is exactly the same proven approach I took when working at Citi during the 2008 financial crisis. And we came out on the other side with a renewed appreciation of what it takes to find stability. We know that finance ebbs and flows. So, in this environment just like any other, we control what we can and trust that sound planning will carry us through what we can’t.

It’s time to take a step back and make an autumnal assessment.

Take stock of financial priorities

When it’s time to cut back a little, don’t feel trapped. You still get to choose what can stay and what can go. Maybe big projects like remodeling can wait until the prices of building materials settle down. Perhaps some money that had been earmarked for retirement accounts can safely be used for monthly expenses. However, you choose to allocate money, staying flexible means you can bend along with changing trends instead of breaking. So cut where you can with an understanding that just about all things financial are temporary.

Focus on debt repayment

If you're able, paying down debt is a great way to set yourself up for financial success down the road. It may seem obvious, but your opportunities are limited when you have debt hanging over your head. While it can be tempting to pay only the minimum on high-interest loans, That just ends up costing you more. If you’re uncertain about the most efficient choices, start by looking at interest rates and pay off debt with the highest APRs first.

Bolster your emergency fund

Take a lesson from those chubby little squirrels hiding acorns all over the place. Whether it’s fending off the cold of winter or the chill of a slowing economy, preparation is key. While every person’s situation and resources are different, a good place to start is by trying to amass an emergency fund that would support you for three to six months if your steady source of income stopped. It’s great to save for a rainy day, but even better if you can cover a season or two.

Maintain your financial situation

Sometimes good is good enough. There’s always a new sector for investing be it crypto, NFT’s or aftermarket sneaker sales. And along with their sometimes impressive upside, they also offer tremendous volatility. If you’re able to keep a steady income and continue investing in reliable vehicles like index funds, your financial future is going to be brighter.

Get the right credit card

But credit cards are for spending, not saving, right? The truth is that credit cards are merely financial tools. Unfortunately, they do open up the possibility for less financially savvy people to put themselves at risk. However, for those who use credit responsibly, a quality credit card leads to savings, rewards, and convenience. Racking up points for every purchase that you’re going to make anyway is a no-brainer. Add to that the safeguards of automatic payments, the exclusive deals for many card members, and 0% introductory offers on both purchases and balance transfers, and you can make the most of even the cloudiest financial forecasts.

Michael is CompareCredit.com's co-founder and a credit card industry insider. He spent 15 years working for top-tier U.S. banks and helped shape the way people currently compare and apply for credit cards online.