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By the time economists declare the next recession has arrived, its ravages on working families will have already begun, and preparing your household for tougher times will be all the more difficult.

So, while opinions abound on if and when a recession is coming, best to tune all that out and get your financial house in order. Preparation for an economic downturn is not all that different from maintaining good financial preparedness in the best of times:

 

1. Household income

Is your spouse or an adult child who lives with you not working? Now's a great time to add a second or third income, even part-time, as a hedge against bad times.

Now, you. Losing your job during a recession makes it that much harder to get another one. Layoffs happen to productive, conscientious workers, so the goal here isn't to shame anyone who has or will lose a job. Keep in mind that most companies lay off a small percentage of their workers, not everyone. What can you do to be a keeper? Good attendance, high productivity, willingness to take on new assignments, being a problem-solver — these traits can help you hang on even at a shrinking employer. Now's not the time to coast.

Mostly it's a bad idea to change jobs heading into a recession. You could end up a LIFO (last-in, first-out) statistic. But is your industry one that usually shrinks and expels workers in a downturn? Is your job classification vulnerable to layoffs? (If you were hired since the last recession, ask around.)

If the answer is yes and yes, here's some good news: At this writing there are millions of unfilled jobs. Glassdoor, Indeed, LinkedIn, Snagajob, USAJobs.gov and other sites can help. It's easy to set up email alerts for job titles in your area, and even happily employed people during all sorts of economic conditions should regularly check in on opportunities. Healthcare, as an example, is an area more resistant to recession, and it's growing. Many healthcare institutions are nonprofits that provide better-than-average benefits, too. If you're convinced you're a sitting duck where you are, looking now could be wise.

 

2. Build the emergency fund.

According to the Federal Reserve, 40% of Americans don't have $400 in cash to cover an emergency. Businesses have, in recent recessions, laid off workers sooner and hired them back later, often learning in the interim to do with fewer hands. Unemployment benefits typically replace only a portion of lost income.

So, set up an automatic deposit from your checking account into a savings account. Skip the brick and mortar banks; online savings banks pay higher yields. Yes, they have FDIC insurance. Put off big purchases, cut spending, take on extra work until you've built a cushion.

The standard advice is to have three months of living expenses saved up. That seems like a dangerously low bar. During the last recession, more than 60% of the unemployed were out of work for at least 15 weeks.

 

3. Rebalance your portfolio.

We all should do this periodically, but most of us don't. If you've been managing your 401(k) with benign neglect — because you're dedicated to buy and hold — your stock allocation may be bigger than you want after this long bull market. And you're closer to retirement than when you set the mix. A 55-year-old might want to consider a slightly lower stock allocation than at 45.

 

4. Pay down credit cards, consider a balance transfer.

If you're laid off or have your hours reduced, you don't want to bear the financial burden of credit card payments. If you only make the minimum payment, your balance gets bigger. If you stop making payments, your credit score will take a big nosedive.

If your credit score is 720 or so, do an internet search for "balance transfer credit card deals." Some credit card issuers are still offering fantastic deals to move your balance over to their card: zero interest payment for a year or more. That's a lot of time to make a serious dent in paying down your principal balance.

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