4 ways to protect your finances if you’re worried about a recession

It seems like every time you turn on the TV or open a newspaper these days, financial experts are talking about the possibility of a recession. But Tiffany Aliche, personal finance expert and founder of The Budgetnista says there are several simple steps you can take to protect your finances.

“We’ve all heard the whispers: recession, recession, recession,” Aliche tells CNBC Make It. But it’s important to keep in mind that even if a recession comes, it’s not going to be like the last, “super terrible” recession that Americans experienced starting in 2008, she says.

That’s because the 2018 financial crisis was linked to the housing market. Thousands of Americans, including Aliche, lost their homes because the housing bubble burst. “So it wasn’t just a financial downturn. People were literally losing their homes. That’s what made it extra terrible,” Aliche says.

It’s also important to keep in mind that fluctuations in the market are normal. Market “ebbs and flows are natural,” Aliche says. But that also means you should always be prepared, she adds.

Here are four steps Aliche recommends taking today so that if a recession hits, you won’t be scrambling.

One way to prepare for any financial setback is to have an emergency savings account. “You should be having at least three months,” Aliche says. However, saving up only three months of living expenses is for someone who knows they can get a job quickly, she adds. For example, a nurse. Nurses are in high demand and it’s a job that you can find pretty much everywhere.

But if you have a specialized job, such as an aerospace engineer or a psychobiologist, it may be more difficult and take longer to find another position if you’re laid off. In that case, you should aim to put away more than three months’ worth of emergency savings, likely closer to a year or more.

Not only should you have robust emergency savings, but you should live below your means. “You should not be living at capacity because you want to be able to pivot,” Aliche says. She was a schoolteacher at a non-profit school when the last recession hit, making about $50,000 a year.

But when she lost her job and had to take a pay cut, she didn’t have to dramatically cut back her expenses. Because she was only spending about $30,000 a year, it was easier for her to find a collection of jobs that covered her living expenses.

To get your finances in good shape before a downturn hits, Aliche recommends putting together a monthly budget so you can identify where you’re spending money and where it may be possible to trim. That might mean packing your lunch more often or opting for a cheaper cable package — or it may require some bigger changes, such as finding a cheaper apartment.

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If a recession does occur, you may need to worry about unemployment. When economic growth slows, companies typically generate less revenue and may need to lay off employees.

That could mean you need to look for a job with little to no notice, so it pays to have your resume up to date, Aliche says. That may also include putting together a portfolio and updating your social media accounts. Does your LinkedIn photo and profile look professional? If not, fix it now so you don’t have to delay if you need to start job hunting.

“You want to make sure that when someone finds you online that they’re already impressed with you,” Aliche says. “I always say this: Social media is your resume before the resume. Are you presenting yourself in a positive light?”