Talk about a dire warning.
- Many pundits believe we are headed for a recession.
- JPMorgan CEO Jamie Dimon has a particularly negative outlook.
- You can prepare for the worst by increasing your savings, cutting unnecessary expenses, and perhaps supplementing your income with a part-time job.
Is there a recession in 2023? That really is the big question, and many experts are convinced that economic conditions are about to seriously deteriorate. This could lead to widespread layoffs and a world of financial hardship for many people.
If you ask JPMorgan CEO Jamie Dimon what’s in store for the economy, you might not like the answer. Dimon recently told lawmakers to “be prepared for the worst” as far as the economy is concerned.
This isn’t the first time Dimon’s warnings have been particularly dire. But it pays to do whatever it takes to prepare for a recession in the coming year — be it a short-lived one or a long, painful one.
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Build your savings
One of the best things you can do to prepare for a recession is to increase your emergency savings. At the very least, you should make sure that your savings account has enough money to cover the necessary living expenses for a full three months. But that’s really the minimum. And if you want better protection, aim for six months to a year’s worth of bills.
Now, a 12-month emergency fund may seem a bit excessive at first. But keep in mind that a recession could be over quickly or could be prolonged. And there’s really no way to know. So if you can save enough money to cover a year’s bills, you’ll have less stress if you lose your job and it takes a while to get back to work.
Save on unnecessary expenses
The more unnecessary expenses you cut, the more money you have free for your emergency savings. Additionally, since a recession could hit and hurt your income, it’s not a bad idea to get used to the idea of spending less.
Think about the different things you pay for on a regular basis. Maybe you enjoy a $15 streaming service and watch it every night, so keep that bill to yourself. But if you barely see any cords, cut the cord.
Get a second job
A side job could be your ticket to boosting your savings ahead of a recession. But it could also serve as a backup income stream in case you lose your job.
Let’s say you start out working 10 hours a week part-time while also working full-time. If you lose your job in 2023, you may have the option to increase your part-time job to 25 hours a week, compensating for much of your loss of income.
While Jamie Dimon has made several predictions of a painful recession, the reality is that we don’t know what the next 12 months hold in store for the economy. But if you want to worry less about a downturn, do what you can to prepare for it while the economy is still in a pretty solid position.
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