The coronavirus pandemic triggered a massive economic downturn, and you may be wondering how to recession-proof your finances.

It’s been more than a decade since the Great Recession rocked the U.S. economy.

While some were warning of a coming slowdown, no one was predicting an an economic shock like this.

The National Bureau of Economy Research says the U.S. economy is now in a recession that came about after the coronavirus outbreak started to spread in February. It marked the end of a record-breaking expansion that went on for almost 11 years.

And this recession is shaping up to be unlike anything the U.S. has seen before. After the S&P 500 suffered its quickest 30-day crash on record, stocks have rallied back from March lows — but the same can’t be said for the economy.

If you’re like me, you are sick of hearing the word “uncertainty,” but it really does describe our economic situation right now.

Recession-proofing your finances means there’s a good chance you’ll be in a better spot when things recover.

Recession-Proof Your Finances

recession economy fed interest rates personal finances recession-proof financesYou may be in a fortunate position and haven’t been severely impacted by the COVID-19 lockdown, but that doesn’t mean you can rest on your laurels.

Reassessing your financial plan should be a top priority.

Banyan Hill Publishing economist and wealth protection specialist Ted Bauman suggests crafting an approach based on your financial situation and where you are in life.

“When it comes to personal finances, there is no one-size-fits-all,” said Bauman, Editor of The Bauman Letter. “Everything depends on your age and your bank balance.”

The key word there is “personal.”

But there are certain things everyone can do no matter your financial status.

Prepare for a Downturn

For one, you should imagine what your finances would look like after another stock market correction. If you have plenty of liquidity, figure out ways to protect it.

“Those with plenty of reasonably liquid wealth can ignore recessions,” Bauman said. “In that case, your main concern should be managing your investments to reduce the risk of drawdowns in stocks.”

If you are younger and retirement is a long way off, you’ll likely be able to ride out a recession. You may even consider pushing more into your 401(k) while the stock market is lower. You’ll see nice gains as things rise back up.

But you should also prepare for anything. That means saving more so you aren’t caught off guard by a sudden job loss.

“If you’re not yet retired and still working or running your own business, the key is to reduce your expenditure and boost your savings rate in case there’s an interruption to your income,” Bauman said.

Taking a good look at your discretionary spending can reveal easy categories to trim down. Dining out is a great example, although that has likely already taken a hit due to the coronavirus lockdown.

Retirees and Recessions

Being a retiree during a recession can be harrowing because you likely can’t rely on a steady flow of income. That means shifting into wealth-protection mode is paramount.

“If you’re already retired on a modest amount of savings, you should shift most of your assets into cash bonds and/or gold, again to avoid stock drawdowns,” Bauman wrote via email. “That way you won’t be forced to liquidate stocks at low prices to meet your required minimum distributions for the year.”

Retirees won’t have to worry about an RMD tax penalty this year thanks to the CARES Act. But there’s no telling what kind of policy will be in place in 2021.

There are many ways to recession-proof your finances. The biggest key is to take a little time to hammer out a plan that makes you feel more stable.

• If you want to learn more about ways you can grow and protect your wealth, check out The Bauman LetterBauman and his team have found a plethora of legal tax loopholes that can help you avoid giving the tax man more than he deserves.