Like many Americans, you may be worried about a potential recession.
To be sure, predictions as to whether we're headed for a recession vary among Wall Street analysts. However, most consumers are convinced one is on the way, two separate surveys from Morning Consult/CNBC and MagnifyMoney found.
Yet whether a downturn happens or not, it's important to keep things in perspective, said personal finance expert Jean Chatzky.
More from Invest in You:
5 ways to cope with recession anxiety
Money moves to make now to stay ahead of inflation
How to know how much student debt you can afford
"Being in a recession is just something that is going to happen from time to time," said Chatzky, host of the "HerMoney" podcast and CEO of HerMoney.com.
A recession is defined as a significant decline in economic activity that is spread across the economy and lasts more than a few months.
"The thing to focus on is not the economy, but your personal economy," she advised.
That may be easier said than done, particularly when dealing with rising prices on everything from gas to food and shelter. The consumer price index, which measures everyday goods and services, jumped 9.1% year over year in June, the latest figures from the Bureau of Labor Statistics show.
Yet being prepared ahead of time can help you navigate through any downturn.
Focus on 'smaller, chunkier goals'
To shore up your finances, Chatzky advises that you start by answering the following questions:
- Are you spending less than you're bringing in?
- Are you saving at a consistent rate?
- Are you grabbing all of your employer's available matching dollars in your 401(k) plan?
- Are you putting money into your health savings account and taking advantage of any employer incentives to do so?
- Are you sticking with your investment philosophy? Do you have an investment philosophy?
- Have you figured out how much you're going to spend in retirement?
- Are you actually working to amass enough money to do the things you want in retirement?
"Those are all much smaller, chunkier goals that you can put into play no matter what the economy is doing around you," said Chatzky, author of "How to Money."
Set aside enough in emergency savings
Also included in those goals should be enough in savings to cover at least three to six months of fixed expenses — aim for closer to six months if you are a one-income family and three if you are a two-income family, she said.
That view is in line with most financial experts' advice. However, some, like "Women & Money" podcast host Suze Orman, believe you should have eight to 12 months saved for an emergency.
On the career side, make sure your resume is ready to go and you have a network that is up to date, Chatzky said.
"If you've got the right pieces in place … you're going to be able to weather that a lot better than if you are just quaking in your boots because the headlines are telling you that a recession is either coming or here already," she said.
SIGN UP: Money 101 is an 8-week learning course to financial freedom, delivered weekly to your inbox. For the Spanish version Dinero 101, click here.
Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns.
