7 Ways To Recession-Proof Your Savings
7 Ways To Recession-Proof Your Savings
Protect your money by taking these seven steps.
Kat Tretina Updated Tue, April 15, 2025 Yahoo Personal Finance
2025 has been off to a rocky start. Consumer confidence has plummeted thanks to persistent inflation, market volatility, and other challenges created by the new administration's aggressive tariff policies. Now, we can add recession concerns to the list.
According to the latest CNBC CFO Council quarterly survey, 60% of CFOs expect a recession in the second half of the year, while another 15% say a recession will hit in 2026. In early April, global investment bank Goldman Sachs also raised its estimate of the likelihood of a U.S. recession from 35% to 45%.
Although the country is not in a recession yet, there's a good chance it could be in the next few months. Taking some steps now can help you recession-proof your savings and protect your finances.
What Is A Recession?
A recession is a term that inspires fear in politicians, economists, and business owners, but what does it really mean? Although precise definitions vary, the National Bureau of Economic Research (NBER) — a private, nonprofit organization that analyzes economic conditions — defines a recession as a period of significant economic decline that lasts for several months.
The NBER looks for several factors to determine if a recession has occurred, such as higher unemployment rates, home prices and sales, stock market declines, and wages.
Recessions are a natural and unavoidable part of the economic cycle. In fact, there have been over a dozen recessions since World War II. The most recent recession was in the spring of 2020, when the COVID-19 pandemic affected the country.
In general, recessions occur every few years, and they typically last for about 10 months.
7 Ways To Recession-Proof Your Savings
During a recession, you may experience the following issues:
Savings interest rates may decline: To stimulate the economy and encourage spending, the Federal Reserve will often slash rates. As a result, loans will become less expensive, but the rates on deposit accounts — such as savings accounts and certificates of deposit (CDs) — will also decline. That means any money you have saved will grow at a much slower pace.
Earnings may stagnate: During a recession, unemployment levels are up, and workers' wages tend to stagnate, so you may not qualify for a raise. Many businesses also initiate layoffs.
Lenders may tighten their standards: During a recession, lenders often institute stricter lending requirements for borrowers, making it more difficult to qualify for new credit or loans.
To minimize the impact of a recession on your financial well-being, follow these steps:
TO READ MORE: https://www.yahoo.com/finance/personal-finance/banking/article/recession-proof-savings-181158511.html
