5 Ways for Gen Z To Be Financially Prepared for a Recession

There is no way to avoid noticing Gen Z — they are the youth of today that could be facing a recession tomorrow. Fears that the economy will take a turn for the worse are growing more prevalent every day.

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Gen Zers, or those born roughly between 1997 and 2012 and are between 12 and 27 years old, could see their money affected during a recession. Sure, those who are still children and in school can probably weather the storm, but those in the workforce should be adequately prepared.

The last time a major recession took place was between 2007 and 2008, when the housing market crashed. Norda Real Estate investments called it “the worst housing crisis since the Great Depression.” Millions of people lost their jobs and their homes, while many businesses went bankrupt. All of this together had a devastating impact on the global economy. Eventually, the U.S. government intervened with a massive bailout of the financial system, preventing a depression.

“Recessions are an inevitable part of the economic cycle, and while predicting them is impossible, preparing for them is within our control and can actually lead to a lot of opportunities,” said R.J. Weiss, the founder at The Ways to Wealth .

GOBankingRates asked our experts for the best ways Gen Z can be financially prepared for a potential recession .

Money mistakes the super wealthy never make - that you might be doing now.

Protect Your Income

Weiss noted that the top priority for a financial fall out, like a recession, should be to safeguard the money you’re making. This might mean that Gen Z has to put in a bit more time and energy at their current job or side hustles, something that Weiss realized is easier said than done.

“The number one thing to protect in a recession is your income,” Weiss said. “So, if there was a time to put in the extra effort at work or add new skills, it’s now.”

Building up your skill sets while on the job and showing your employers you can go the extra mile is never a bad thing. So during a recession, it would benefit Gen Zers well to continue building skills while also looking for opportunities at companies that are hiring rather than laying off.

Try To Earn Some Extra Money

“Any extra cash you can find right now is a plus,” said Mark Henry, the founder and CEO at Alloy Wealth Management .

The more you have saved, the more of a cushion you’ll have during a recession. Even if you only save a small amount extra, every little bit helps when times are tough.

Try picking up part-time work, even if it’s only a few hours a week. If you get laid off, you’ll be glad to have existing connections and can take on extra shifts to hold you over while you look for a job in your field.

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Keep Cash on Hand

Credit cards, Venmo, Apple Pay and other modes of digital money are what Gen Z typically uses to pay for everyday goods and services. While that might be a viable way of moving money during good times, during a recession, cash is king.

“A cash reserve of at least three months’ expenses is also super important,” said Weiss. “This not only provides peace of mind but can also be a lifesaver if you experience income loss.”

Having some cash not only in your wallet, but also in a safe place at home can safeguard you from any potential banking crisis that might come with a recession, too.

Build Up an Emergency Fund

Save up for a rainy day now, since recession clouds are on the horizon and the downpour at this point is unpredictable.

“Whether we’re in a recession or not, having three months of living expenses set aside in an emergency fund is important,” said Weiss. “It not only allows you to sleep better, but it also comes in handy if you lose your income.”

Henry agreed with Weiss. “Recession or not, an emergency fund should be your top priority,” Henry said. “Aim to save at least three to six months of expenses, though you might consider maintaining more than that in an emergency fund in the face of recession fears.”

Start with calculating your expenses and decide on a goal for your emergency fund, then do the math to find out how much you should save and for how long to reach it.

“An emergency fund also allows you the comfort of continuing to invest during a recession,” explained Weiss.

“Buying when the market is down is where the actual money is made in investing. If you can keep your job and continue to invest for your future, that’s often where you can build real wealth or even take advantage of other things like lower asset prices in housing.”

Reduce Your Debt

Finally, experts recommend focusing on debt reduction, particularly when it comes to any high-interest debt Gen Zers might be carrying on them.

According to Henry, “Most Gen Zers likely have student debt right now. If you are currently employed, try to overpay on your student loans whenever possible.

“This is always a good idea since it can cut the time you spend paying loans off and reduce the total amount paid overtime. But if a recession is looming, you may soon find yourself struggling to make monthly payments.”

Weiss agreed. “Paying down debt, especially high-interest credit card debt is also important,” he said. “While you never want to rely on credit card debt, knowing that there’s credit available can give you peace of mind and protect against worst-case scenarios.”

While there might be a potential recession in the near future, Gen Z and every other age demographic should not think it’s all gloom and doom. As Weiss pointed out, significant opportunities typically come during recessions, so long as you are prepared to weather the storm.

This article originally appeared on GOBankingRates.com : 5 Ways for Gen Z To Be Financially Prepared for a Recession