3 Tips to Navigate a Recession

Most importantly, stay calm!!

Author

Michela Allocca
April 15, 2025

🚨 I have a free recession guide that goes into more detail on what we are discussing today if you’d like to download it HERE!

💸 Remember, your best financial defense is getting the basics right. Make sure you have a rock solid budget BEFORE a recession happens. Check out the Personal Finance Dashboard and the Basic Budgeting Template!

💸 Interested in lifestyle content? Come join me over on my personal instagram, @michela_alloccaa !! I’d love to have ya ❤️ 

MONEY
The Recession Alarms are Ringing

The last few weeks have been slightly alarming, to say the least. The markets are in turmoil, everyone is freaking out, and it’s feeling super doom and gloomy.

If you know me, you know what I am going to say: I like to focus on the things I can control.

So with the recession alarms ringing, today I am going to share a few things you can do to take your financial power back when it feels like everything is going awry.

I do really, really want to emphasize to you how important it is to stay calm. Don’t let social media scare you into making and rash financial decisions!! Should we enter a recession (we’re not in one right now), it isn’t your first rodeo. And it will not be your last. So learn how to stay the course and maintain decorum!

As a friendly reminder, I track and monitor my finances using The Personal Finance Dashboard! I highly recommend as we enter this period of economic instability that you start keeping a budget and tracking your expenses. You can also check out the Basic Budgeting Template!

1️⃣ Evaluate Your Cash Position

During a recession, Cash is King (or Queen). Keeping some extra cash on hand has a few main benefits:

  • Provides a safety net for any unexpected expenses or circumstances

  • It retains it’s value (in the short-term) compared to investments, which tend to fluctuate a lot during economic uncertainty

  • There is a level of psychological security from having cash reserves that can help reduce stress

Now is a great time to review your emergency fund, and make sure you’ve got a little extra cash as a buffer just in case.

2️⃣ Take a Financial Snapshot

A financial snapshot is a full audit of your financial situation. The purpose is to clearly understand your position and use it to make better and more informed financial decisions going forward.

There are 3 key steps to take a financial snapshot:

  • Take inventory of all your accounts, and note how much you have in each

  • Review your cash flow to better understand how much you have flowing in and out on a regular basis

  • Measure your output by estimating your monthly average spend on essentials and non-essentials

You can take a financial snapshot inside the Personal Finance Dashboard!

3️⃣ Re-Evaluate Your Goals & Spending

Recessions are often associated with high unemployment and inflation, so there may be a few short-term sacrifices you need to make a little re-prioritization of your goals.

When it comes to your financial goals, the top 2 priorities are:

  • Boosting your emergency fund (you need at least 3 months!! But ideally 5-6)

  • Paying off high-interest debt like credit card debt

When to your spending, identify a few areas in your budget where you’d be able to cut back or entirely eliminate. You could also consider taking a spending detox to reroute some of your income towards your goals in the short-term!

WEEKLY RECOMMENDATION
4 Questions to Ask During Market Turmoil

The last few weeks have been a little hectic in the financial markets. I loved this article which highlights 4 important questions to ask yourself when the markets go crazy. I also recently subscribed to the WSJ and have been reading Jason Zweig’s column - it’s great!

RESOURCES
What’s Happening This Week at Break Your Budget

  • This week on Don’t Depend on Daddy: I am sharing a few microhabits that have made my life better. My priority this year is to spend the extra 10 minutes to slow down and FEEL better. If you’re looking to refine your habits, you’ll love this episode!

  • My Net Worth Breakdown: In 2025 you need to change the way you think about spending. In this video, I break down Cost Per Use and how I evaluate my purchases to get the most value!

LOOKING FOR MORE?
Check out ALL of my Money & Career Resources!

xoxo,

Michela