When the economy starts showing signs of strain—whether it’s inflation, layoffs, or a volatile stock market—it’s natural to feel anxious about your financial future. Fear-based decisions rarely lead to long-term stability, but there are smart, practical steps you can take now to help shield yourself from potential disruptions. Below are several money moves to consider if you’re feeling uneasy about what lies ahead. Each of them is grounded in long-term financial health—not reactionary cuts or panic pivots.
1. Reevaluate Your Cash Flow and Emergency Savings
The first place to start is your day-to-day finances. Economic downturns often affect income, job security, or household spending habits. Now is the time to revisit your monthly budget and ensure your income and expenses are still in balance. Look for places where you can reasonably reduce spending without sacrificing essentials.
More importantly, check on your emergency fund. A healthy cushion of three to six months of living expenses is considered ideal. If you’re self-employed, in a commission-based role, or in an industry vulnerable to recession, you may want to aim for closer to six months—or more.
2. Avoid Major Lifestyle Inflation
If your income has remained stable—or even increased—during this period of uncertainty, it can be tempting to upgrade your lifestyle. Maybe it’s a new car, higher rent, or an expensive subscription you once thought was unnecessary. But when the economic forecast is shaky, restraint matters.
Instead of letting higher earnings drift into day-to-day spending, use that extra money to build up reserves, pay off high-interest debt, or contribute more toward retirement. Lifestyle inflation can be one of the most damaging financial habits, especially when the economy takes a turn and fixed expenses are suddenly harder to meet.
3. Diversify Your Income Streams
One of the more proactive money moves you can make during economic downturns is to explore ways to diversify your income. That doesn’t always mean launching a business or becoming a freelancer overnight, but it could mean identifying how your existing skills translate into side opportunities.
Teaching, consulting, selling digital products, or even part-time seasonal work can offer an additional layer of income security. For business owners, diversification might mean exploring new offerings or expanding into related markets. The key is to start thinking now about how you can create multiple income paths, rather than relying on one vulnerable source.
4. Review Your Investment Strategy, Don’t Abandon It
Economic fear often sends people rushing to cash out investments. While this instinct is understandable, it can have lasting consequences. Timing the market is nearly impossible, and selling during a dip can lock in losses that would have otherwise recovered over time.
Instead, revisit your investment mix. Are your risk levels still appropriate for your age, income needs, and goals? Are you overexposed to any one sector or asset class? In times of volatility, rebalancing your portfolio—not liquidating it—might be the right move.
A CPA who understands your overall financial goals can work alongside your financial advisor to determine whether your tax strategies and investment allocations still serve your long-term objectives.
5. Strengthen Retirement Contributions if You Can
It might seem counterintuitive to contribute more to retirement during uncertain times, but it’s often one of the smartest long-term decisions. When markets dip, you’re buying shares at a lower cost—which positions your portfolio for greater potential growth later.
If you’ve reduced your spending or redirected bonus income, consider allocating more to your 401(k) or IRA. Even small increases in contributions can add up, especially when paired with employer matches or tax-advantaged growth.
For high-income earners, now is a good time to evaluate backdoor Roth contributions, SEP-IRA options (for the self-employed), or health savings accounts (HSAs) as additional tax-efficient vehicles.
6. Plan for Tax Efficiency, Not Just Tax Filing
Economic downturns often coincide with tax law changes—sometimes temporary, sometimes not. Waiting until tax season to think about your liabilities is often too late to make meaningful adjustments.
Instead, work with your CPA to explore tax moves that may benefit you right now. These might include loss harvesting (for investments that have dropped), accelerating or deferring income, maximizing above-the-line deductions, or setting up the right business entity if you’ve started side work.
Proactive tax planning ensures you’re not leaving money on the table and that you're in a strong position whether the economy rebounds quickly or takes its time to stabilize.
7. Keep Financial Documents and Digital Accounts Organized
In chaotic financial times, organization matters. If you’re laid off or face a significant life event, having your financial documents in order can make transitions smoother. This includes everything from bank accounts and investment login details to insurance policies, estate plans, and tax returns.
Make sure your spouse or trusted family member knows how to access key documents if needed. Organizing your digital footprint now reduces stress later and gives you a clearer picture of where things stand.
8. Talk to Someone Before You React
When the economy feels shaky, so do our emotions. But financial decisions made in fear rarely stand the test of time. Whether you’re worried about layoffs, inflation, or market swings, talking to a qualified professional can help put your concerns in perspective.
Your CPA can offer insights into how the economy affects your specific situation—not just national trends. They can help you weigh trade-offs, avoid costly errors, and craft a plan that reflects both the challenges and opportunities ahead.
Economic uncertainty is never comfortable—but it doesn’t have to be destabilizing. By taking measured, thoughtful action, you can put yourself in a stronger financial position, no matter how the headlines shift. The most resilient plans are the ones built not just for growth, but for adaptability. If you’re unsure where to begin, start with one conversation—with a CPA who understands both your numbers and your long-term goals. Because financial peace of mind isn’t about knowing what will happen—it’s about being ready for whatever does.
by Kate Supino