scroll top

How to prepare for a recession and survive in 2022 — 9 things to do now

We get commissions for purchases made through links in this post. Here's more on how we make money.

Wondering if a recession is coming in 2022 and how to prepare?

While the United States' most recent recession lasted just two months, ending in April 2020, current soaring gas prices, Russia’s war on Ukraine, and rising inflation following pandemic lockdowns have led some experts to predict the U.S. could slide into a recession anytime — or even that we are in one now.

News broke late July 28 that the United States. went through a second straight quarter of negative growth. We appear to be in a recession by the numbers, but the final word will come from the National Bureau of Economic Research.

This post will help you prepare for a higher chance of unemployment, investment losses and general financial instability, help you if you are living paycheck-to-paycheck, and have trouble paying your bills.

Rules for weathering a recession are good to follow no matter the economy, and come down to these points:

Spend less, save, and earn more.

Keep reading for specifics:

What is a recession?

The definition of a recession is a downturn in the economy. On a broader scale, this means that businesses lose money and industry produces less product for two quarters — or six months — in a row.

What does a recession mean for everyday people? Recessions are typically marked by:

  • High unemployment rate
  • Wages that do not go up
  • Lower housing prices
  • Downturn in stock market equities and other investments

How to prepare for a recession: All the things you can do right now

1. Create a financial plan now. 

Money impacts nearly every part of our lives. When we’re stressed about finances, our families, our relationships, and even our physical wellbeing suffers. If you get on top of your finances before a recession, you can maintain power over your life. This includes:

  • Budget
  • Savings + investing plan
  • Goals for earning more
  • Getting a new job

Read: 9 ways single moms can make money and build wealth in 2022

2. Live frugally always

If you want to achieve and maintain financial stability, spending frugally is a big part of the equation. Start by tracking your usual expenses, then figure out where you can cut spending. Commit to meal planning instead of dining out, cancel recurring subscriptions you no longer use, and curb unnecessary shopping. 

Read: 7 easy steps to set up a budget (from a single mom of 2)

3. Have a savings cushion and build up your emergency fund

A 2019 Federal Reserve report found that about 40 percent of Americans wouldn’t be able to cover an unexpected $400 expense. If you do't have one, start an emergency fund so you have extra money even if you get laid off. 

A stash of $1,000 is a good place to start, and aim for at least 3 months' regular income, so open a savings account:

19 easy and legit ways to get free gift cards in 2022

4. Sell stuff you don't need 

Why let your unused stuff sit in a closet when you could turn it into money? Learn more about selling through pawnbrokers and consignment shops, and sell your gold, diamonds, jewelry and silver online.

Gold, diamond and silver prices have been at record highs this year, with gold topping $2,000 in March for only the second time in 50 years. CashforGoldUSA.com is our No. 1 recommendation for selling gold, silver, diamonds, pearls, coins, flatware and other precious metals and gemstones.

If you want to downsize to save money, you can also sell your house for cash.

5. Get a side gig to ensure multiple streams of income. 

If you lose your job during a recession (or any time), it pays — literally — to have a side gig or backup job for an additional stream of income.

Check out our lists of best at-home career-level jobs, best high-paying jobs that do not require a degree, and 10 business ideas for moms.

6. Prioritize and pay down debt

If you have debt from credit cards, student loans, or other expenses, consider consolidating your balances onto a 0% balance transfer credit card.

Work to deal with your tax debt, too:

7. Avoid or delay major purchases

During a recession, there’s a greater risk that you could lose your job. That’s why it’s not smart to make major purchases or accumulate new debt you might not be able to pay off.

Instead, repair appliances and your vehicle, and attempt DIY home projects over financing new ones.

8. Invest in yourself by learning recession-proof skills

The very best way to build financial security is to make sure you have a job. Here is our list of best at-home, high-paying careers, which includes recession-friendly skills like:

Bookkeeping

Proofreading

Medical biller and coder

Coder / programmer

Read our guides:

42 recession-proof jobs

7 recession-proof businesses 

9. Identify support systems/network

Devise a plan for what you’ll do and where you’ll go if you lose your job or find yourself without a place to live. 

Here is our list of government and other resources for low-income families:

Help for single moms: 16+ resources$500 monthly single mom grant
Free laptopsScholarships for single moms
Free carFree Christmas gifts
Free smartphoneBest jobs moms can do from home
Free wifiFree and low-cost prescriptions
Free formulaFree clothes
Free toysGovernment assistance for single moms
Free gasFree daycare
Free preschoolAffordable dentures
Free prescription glasses10+ charities that help single mothers
9 ways to get free money instantly

Shore up your friendships and other social networks that can help you find work, resources, and share ideas for weathering the storm — not to mention get together and have fun!

How to survive a recession: 10 steps to take now

Now that we’re likely in a recession, many people want to know, “What should I do during a recession?”

If you still have a job, here’s what you should do right now:

  1. Have a financial plan — don’t just wing it! 
  2. Start or build an emergency fund
  3. Inveset in training, education, networking and building your career 
  4. Create a budget and otherwise double-down on frugality
  5. Manage your debt 
  6. Delay major purchases like a car or appliance 
  7. Sell unwanted and unused items to make extra money
  8. Consider starting a side gig for extra income
  9. Create a network — personal and professional

If you have lost your job and don't have a financial cushion, here is what you can do now:

  1. Focus on the basics: Rent, utilities, food and frugal living. Apply immediately for unemployment and other public programs. A budget is critical. Sell things you don't need. Gold and jewelry, cars you can do without, clothes and appliances. You could also use consignment shops or pawn shops to get quick cash.
  2. Maintain your credit score — a low score means higher interest rates and digging yourself deeper in debt. Take steps to improve your credit: How to build your credit fast
  3. While you look for work, keep your skills current with online courses, a side gig. Read: Best jobs for moms
  4. Take advantage of all the resources available and apply for my Single Mom Grant.

Common questions about economic recessions

What happens during a recession?

This post elaborates on what you can expect to see during a recession, including that prices increase, people and businesses spend less, which leads to higher unemployment while wages stay steady. Local and federal governments have less tax revenue, so they spend less on programs and projects — and the stock market tends to decline.  

How to ask for a pay raise as a woman successfully in this economy

What is the difference between recession and depression?

In general, during a recession there is less economic activity. Typically, the financial pinch follows the following flow when the stock market tanks and home prices dip.

A depression is a severe and prolonged downturn in economic activity, typically defined as lasting three or more years and/or a decline in real gross domestic product (GDP) of at least 10%.

An economic depression is characterized by:

  • High unemployment rate
  • Low inflation — or even deflation (when the price of items goes down)
  • Bear market for stock market
  • Credit defaults for individuals, companies and governments
  • Bankruptcies
  • Less available credit
  • The affluent tend to save more during a depression

While inflation does not directly cause a recession, steps taken to combat inflation can lead to a recession. 

Inflation is a measure of the rising cost of goods in the economy, and it is often fueled by high production costs and increased product demand. When inflation surges too quickly, the Federal Reserve might hike interest rates to slow buyer demand.

As spending decreases following a rate hike, companies respond by dropping prices and slowing production, which could lead to layoffs or salary reductions. This decline in economic activity over several months is known as a recession. 

Who does a recession impact the most?

Educate yourself about what a recession means for you — if you are affluent, have cash to invest in real estate, the stock market or faltering business, a recession can be a great opportunity to buy low, and hopefully later sell high.

For most people, a recession is a time of anxiety as they worry about losing their jobs — or face unemployment, which lasts longer than average during a recession. Prices on everyday items tend to go up, while real estate markets go down. 

Positive effects of a recession

A recession is part of a natural, healthy cycle of an economy. Some human behavior shows improvement, including:

  • People tend to save more money during a recession.
  • People shop less during a recession — which is good for the environment.
  • Interest rates are cut, which is great if you need to borrow money, including for a mortgage.
  • Floundering businesses close, which means that stronger businesses are more likely to thrive.
  • There are many financial opportunities from lower prices overall — including the opportunity to buy stocks, real estate and businesses at discounted prices.

Negative effects of a recession

Of course, there are negative effects of a recession, the most common being: 

  • Higher unemployment rates
  • Lower wages and salaries
  • Decreased home and stock prices
  • Increased government spending

Common questions about how to survive a recession

Is it good to have cash in a recession?

It is always great to have cash on hand, at least a three-month emergency fund. Low interest rates on savings and money-market accounts during recessions mean that big stores of cash may be unattractive compared with other tools.

What should you stockpile in a recession?

Stockpiling items in a recession is a good way to save money in the long run. In general, these are some items to stockpile in the event of an economic downturn:

  • Canned goods like fruits, veggies, beans, soups, broths, and meats
  • Foods that can be frozen like meat and breads
  • Dry goods like rice, noodles, pasta, rolled oats, and seeds (kept in a cool, dry place)
  • Baking supplies like honey, flour, sugar, vanilla
  • Nut butters
  • Spices 
  • Oils
  • Paper products
  • Water

Some financial advisors suggest stockpiling cash while the real estate and stock markets are in wild fluctuation. Then you can buy when markets are low. 

What should you not do in a recession?

In general, here are some no-nos (but common mistakes) during a recession:

  • Liquidate all your investments
  • Withdraw from your 401k or other retirement accounts
  • Co-sign for a loan or otherwise take on more debt than you have to
  • Avoid taking too many career risks
  • Business owners should avoid capital investments now

Bottom line: You can survive a recession and thrive afterward.

Most people fare OK during and after a recession. While professional opportunities are fewer, there are still ways to earn a living, grow your career and investments during a recession. An economic downturn is always an opportunity to reassess your values and align your money with your goals.

What is a recession?

A recession is a downturn in the economy. On a broader scale, this means that businesses lose money and industry produces less product for two quarters or six months in a row.

What happens during a recession?

Prices increase, people and businesses spend less, which leads to higher unemployment while wages stay steady. Local and federal governments have less tax revenue, so they spend less on programs and projects — and the stock market tends to decline.  

Who does a recession impact the most?

For most people, a recession is a time of anxiety as they worry about losing their jobs — or face unemployment, which lasts longer than average during a recession. Prices on everyday items tend to go up, while real estate markets go down.

Is it good to have cash in a recession?

It is always great to have cash on hand, at least a three-month emergency fund.

What should you not do in a recession?

In general, here are some no-nos (but common mistakes) during a recession: liquidate all your investments; withdraw from your 401k or other retirement accounts; among others.

Wealthysinglemommy.com founder Emma Johnson is an award-winning business journalist, activist, author and expert. A former Associated Press reporter and MSN Money columnist, Emma has appeared on CNBC, New York Times, Wall Street Journal, NPR, TIME, The Doctors, Elle, O, The Oprah Magazine. Winner of Parents magazine’s “Best of the Web” and a New York Observer “Most Eligible New Yorker," her #1 bestseller, The Kickass Single Mom (Penguin), was a New York Post Must Read. As an expert on divorce and gender, Emma presented at the United Nations Summit for Gender Equality and multiple state legislature hearings. More about Emma's credentials.

5 Comments

INTEREST Rates decrease during a recession? Historically with inflation I have not seen that happen. I lived through the 1981 recession and under Democratic President Jimmy Carter ( Whom I respect) the prime interest rate was 21%, and I remember exactly were is was when heard the info on WGN Radio. As a single young woman I pondered how will anyone ever purchase their own home? We all figured the single percent rate our parents knew of would never exist again! Second, Credit card rates; yikes! Even though the interest on credit at that time was tax deductible, the rates still sucked up our cash. I hear young people say inflation is good, and shake my head.

When coronavirus pandemic started company i work for said that they will pay only 1 / 2 of my salary and my wife lost her job. We had lots of bank debts. And it has become impossible to pay these debts. And we did not have anything valuable to sell.

So we had executed this financial plan :

1) First two months we did not pay rent and reserved this money as a budget pillow. ( We had to )
2) We stopped paying bank debts.
3) Always used cash money and stopped using credit card.
4) We spent money with this order : Food & Rent & Bills.
5) We planned to close home and move in my brothers home till crisis ends.

Later government gave 60 months termed credit and forced banks to postpone debt payments. Also starting to work home office decreased some expenses. And my company started to pay 3 / 4 of my salary.

So we got rid of living like a criminal. This is my experience.

Hi Emma,

What a useful post.

I’ve been a single Mom for several years now, and lucky enough to have worked from home almost all my life so lockdown hasn’t been detrimental to me – in fact it’s allowed me to spend more time on my online business.

On the financial side, again – lucky I know, I have saved so much money by not going out – especially shopping – that I’ve ended up better off than I was pre-lockdown!

Partly this has been because I’ve realized I can live a much simpler life, and still enjoy it.

Leave a Reply

Your email address will not be published.