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The U.S. is officially in a recession. Here's what you should do with your money


Have the past few months made you reconsider how and why you spend your money? CNBC Make It would like to hear from you. Email reporter Alicia Adamczyk at

The U.S. economy officially peaked in February and has since entered a recession, ending the longest expansion on record, the National Bureau of Economic Research declared Monday.

This recession — spurred by the coronavirus pandemic and subsequent public health response — is an unusual one, NBER's Business Cycle Dating Committee said in a statement. However, "the unprecedented magnitude of the decline in employment and production, and its broad reach across the entire economy, warrants the designation of this episode as a recession, even if it turns out to be briefer than earlier contractions."

A recession is "a significant decline in economic activity spread across the economy" typically lasting a few months, per NBER. The U.S. economy had been expanding for 128 months, since January 2009, before peaking in February 2020. It's been declining the past four months as the coronavirus pandemic has closed down much of the economy and led to over 42 million Americans filing jobless claims.

If you're worried about what that means for your money, here's what you need to know. 

What to do with your money during a recession

"Recession" is a scary word, but for the most part, but it's a normal part of the economic cycle. Given that many people have already been dealing with layoffs, furloughs and reduced hours, this official designation might not make much of a difference in what they do going forward, Kevin Mahoney, CFP and founder and CEO of Illumint, tells CNBC Make It

"There may be a best-case scenario in which the economy rebounds quickly and jobs return in the months ahead," says Mahoney. "The more prudent way to use this news, though, is to prepare for the scenario in which our financial stability remains in doubt for the foreseeable future."

So while it's unclear how long this recession will last, it's important to think of the potential long-term consequences of any financial decision. Taking on extra debt — say, by buying a new car or co-signing a loan — is typically advised against during a recession, in case you lose your income.

"I would consider putting off big purchases if they would use emergency funds, and look at paying down credit card debt," Michelle Fait, a Seattle-based certified financial planner, tells CNBC Make It.

For investors specifically, recessions are typically not the time to change your strategy significantly, and no investor should ever try to time the market. Instead, it's imperative to consistently invest in a well-diversified, balanced investment mix to reduce your overall risk. 

Beyond that, focus on what you can control. Continue to nurture your business networks and personal relationships. Take stock of your emergency savings and any other sources of cash you might rely on in a pinch, like retirement savings. See if there are extraneous expenses you can cut for a few months to stash a tiny bit more money away. 

"Even if you think your job is secure, if you are working from home, I'd take some time to consider how you are presenting online, in a video meeting, and make sure you are presenting your best self," says Fait, noting that an online meeting could turn into an online job interview if you lose your job. "Just as you would consider an interview outfit, refining the light and camera angle when in an online meeting can help you make a good impression."

And if you haven't done so in the past few months, now is a good time to reassess your financial plan as a whole, Brittney Castro, Mint CFP, tells CNBC Make It. Living through a pandemic and political unrest has certainly changed the way many people think about their money. Your priorities, too, might be drastically different than they were at the beginning of this year.

"Review your overall financial plan to ensure you have everything updated such as your budget, cash accounts, other short term goals, retirement, tax planning and insurance and estate planning," she says.

Think "through your ability — both in practical terms and also psychologically — to withstand and adapt to a new or continued financial hit later this year," suggests Mahoney. "Additional strategizing now can help to minimize the stress we feel later if we've actually entered a prolonged recession."

So take time to to evaluate your finances as a whole — income, savings, investments, expenditures — and ask yourself if how you're allocating your money still makes sense. 

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