After a year of roller coaster tariffs, mass cutbacks and a record-long government shutdown, the latest jobs data suggests the U.S. economy may be a warning sign. real recession
Although US employers added 64,000 jobs in November, according to the latest Bureau of Labor Statistics data (1), unemployment rose to 4.6% – the highest rate since September 2021.
“The US economy is in a hiring slump,” Heather Long, chief economist at Navy Federal Credit Union, wrote (2) in a post on X (formerly Twitter).
“Almost no jobs have been added since April. Wage growth is slowing. 710,000 more people are unemployed now than in November 2024,” he added, “blaming the tariff impact, AI, and cost cutting.”
Whether it’s a “hiring slump” or not, on the heels of a structural goods recession (3), before a full-blown recession, a tight job market is a good time to take a closer look at your money habits and put some financial safeguards in place.
Here are 15 tricks — and missteps to avoid — to make sure your hard-earned cash keeps working for you, no matter what the recession.
Don’t send calendar invitations for financial emergencies, like job loss—they just pop up.
That’s why it’s a good idea to have an emergency fund, separate from long-term investments like a 401(k). Parking your emergency stash in a high-yield savings account can mean the difference between steady cash and steady growth. With the national average savings account rate sitting at 0.39% (4), high-yield accounts can offer returns closer to 4%.
Record auto loans and a recent spike in delinquency are seen as another possible sign of a recession on the horizon. Another way to prepare yourself is to rethink your approach to debt.
While debt can feel like an anchor pulling you down, there are ways to stay put, such as through debt consolidation.
By rolling multiple loans into one, you’ll have fewer bills to juggle, which means less stress and less chance of missing a payment. If you qualify for a lower interest rate, you can save money in the long run.
There was a time when net worth felt like a conversation reserved for Wall Street titans. But in reality, everyone has a number associated with their financial identity. To calculate yours, start by adding up your assets, including cash in the bank, investments and retirement accounts. Then, reduce your liabilities, such as debts and other financial obligations. The result is your net worth.
During an unexpected change in the economy or a surprise job loss, knowing what you have — and what you owe — can help navigate the uncertainty.
Some people turn a blind eye to how much they’re really spending, but when it comes to money, ignorance isn’t bliss—it’s expensive. A budget is not designed to cut everything out of your life. Rather, it is a way for you to set your financial priorities and ensure that your money is allocated to assets.
For example, one budgeting method that has gained popularity is the 50/30/20 rule, which simplifies budgeting into three categories: needs, wants, and savings/investments. Instead of complicated spreadsheets, this method provides a clear framework that keeps your expenses under control without taking over your life.
Inflation can be unpredictable, but your grocery bill doesn’t have to be. When you can’t store a year’s worth of fresh produce, stocking up on non-perishables is a way to cushion against rising costs.
With food prices up 3.2% over the past year (5) — and predicted to rise 2.7% in 2026 — every little bit of planning helps. If you have pantry space, now is the time to grab extra staples before they become more valuable.
Talking to a financial advisor is even more important during periods of financial uncertainty.
For example, they can guide you to investments that have historically performed well during recessions. Whether it’s retirement, major purchases or adjusting to long-term financial goals, an advisor can help ensure that a potential downturn doesn’t derail your plans.
Read more: Vanguard reveals what could be coming for US stocks, and it’s ringing alarm bells for retirees. Here’s why and how to protect yourself
There is something comforting about a steady paycheck but when the cost of daily necessities climbs up, a single income stream can’t cut it. Having a side hustle can also provide more breathing room in a tough job market.
Most working Americans now represent 5.7% of the workforce (6), and new tax rules mean fewer headaches when it comes to filing for those with informal income from selling products online, freelancing or doing gig work. Side hustles have become the golden child of financial security.
That dream vacation, new car or latest technology may sound appealing, but major purchases can strain your budget when financial uncertainty is on the horizon. Before swiping your credit card, it might be worth asking yourself, is this a necessity or can it wait? Or, do you have cash set aside, say in a sinking fund so you don’t have to take out a loan. necessary Large purchases.
When the stock market starts to slide, the urge to sell everything and cut your losses can be powerful. But panic selling often results in losses that can be recovered over time. Market fluctuations are nothing new, but historically they rebound – and those who stay invested often come out ahead.
Selling at the first sign of trouble means missing out on potential rebounds, and often paying a premium to buy back when things “feel safe.”
Your credit score isn’t just a random number and ignoring it can ruin your financial reputation, especially during a recession when lenders tighten their standards. A poor score can mean higher interest rates on loans and credit cards, or even difficulty securing a mortgage, car loan or lease approval.
Many people assume that if they are not actively borrowing, their credit score does not matter. But even simple things like missing payments, carrying high balances or buy-now, pay-later plans can quietly wipe it out.
Some expenses are optional – your morning latte, that extra streaming subscription. Car insurance, utility bills, even phone plans – these are non-negotiables that can steadily drain your bank account if you’re not careful.
Still, according to ValuePenguin, more than 65% of Americans don’t bother comparison shopping for the best rate when their auto insurance is up for renewal (7), a total of 92% of policyholders who save money when switching companies. This means many people are paying more simply because they don’t look around.
The effect of inflation on your expenses is something you may not notice right away, but you will notice it over time. For example, what used to be a $4 cup of coffee may now be pushing $6. When you don’t adjust your budget for inflation, you risk spending more than you thought—which can slowly deplete your savings.
It might be worth starting to track price increases, adjusting spending habits and looking for ways to stretch your dollars — whether it’s switching to generic brands, preparing meals or reevaluating your subscriptions.
Dipping into your retirement savings may seem like an easy solution, but withdrawing money early can do more harm than good. Retirement accounts, such as 401(k)s and Individual Retirement Accounts (IRAs), come with early withdrawal penalties — typically 10% if you withdraw money before age 59½.
On top of that, you will have to pay income tax on the withdrawal amount. But, the real cost isn’t just fees—it’s also lost growth. Money invested in retirement accounts over time, meaning an early withdrawal today could cost you thousands in the long run.
Even in a thriving economy, quitting your job without a backup plan is a bold move. As companies tighten budgets and layoffs become more common, walking away from a steady paycheck without a clear next step can put you in a tough spot.
A recession—even if it’s just one job, for now—isn’t the time for impulsive exits. Instead, if you’re feeling stuck or undervalued, start mapping out your next move before handing in your resignation. Update your resume, network strategically and explore new opportunities while you still have financial stability.
Lifestyle inflation can be a silent budget killer. This can happen if you get a raise or bonus check, making spending a little easier. Whether you’re thinking about upgrading your apartment, dining out or just justifying a big purchase because you now have some wiggle room.
But if your expenses grow as fast as your income, you’re not really getting ahead—you’re just treading water in an expensive pool. Instead of getting caught up in lifestyle inflation, building an emergency fund, investing more and paying off debt faster are smart moves.
We rely only on vetted sources and reliable third-party reporting. For details, see our editorial ethics and guidelines.
US Bureau of Labor Statistics (1); @byHeatherLong/X (2); CNBC (3); Federal Deposit Insurance Corporation (4); US Department of Agriculture (5); Federal Reserve Bank of St. Louis (6); Mann the Penguin (7)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
