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If you’ve been keeping tabs on the news lately, you might be aware of the looming threat of an economic recession. If you’re like a lot of people, you probably hear the term often but don’t necessarily know what it means.


A recession is defined as a consecutive decline in economic growth for two quarters, and they tend to happen more than we think (roughly every 3.5 years).

The COVID-19 pandemic got the word thrown around a lot, and given the 2008 worldwide recession many of us not-so-fondly remember, it makes sense that a recession is our generation’s boogeyman - so what do we do about the possibility of another one?

Read on to find out more about how to prepare for a potential recession, and how you can make your dinero work for you should the economy slow down.

Get that emergency fund stacked

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We get it - saving money or having any kind of savings at all is a privilege, but a safety net is never a bad thing. In a world where Latina finances are complicated, savings are simple and straightforward. We’ve all heard the rule of having at least 3 months of emergency savings at all times, but during times of economic downturn, we recommend trying to up this to 6 months of savings if possible.

If it’s hard to fathom even saving that much, try to stick to a very strict budget and deposit savings wherever you can - an odd $5 here, $20 there does actually have a large impact! And with so many AI-enabled savings tech out there, it’s easy to easily stash away very small amounts every day they add up over time without ever giving it a second thought. Our fave is Digit.

Pay off high interest debt

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While we’re always told credit is king, carrying high interest debt such as credit cards is a no-go in a recession economy. With so much economic uncertainty, it’s important to put yourself in a position to win and ensure that your debt-free status is secured - so do your best to pay off those cards, mija! Your future self will thank you for the clean slate.

Consider your current job security

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Many people saw themselves unexpectedly filling out applications for unemployment during the pandemic, and jobs that were previously seen as “safe” were found to have little to no security at all during the pandemic, making us rethink the entire concept of job security entirely. Some industries were found to be more volatile than we previously thought - think service jobs like retail and foodservice - and many made career changes based on that alone.

Recession-resistant jobs, on the other hand, included those employed in healthcare, education, public safety, and the federal government. With recent layoff announcements from major tech companies like Meta and Netflix, it might be time to shop around for a new career with more job safety.

Keep an eye on the news

Yes, watching the news is a critical component to remaining informed during pre-recession times! Though recessions are not predictable, there are some early warning signs that help you prepare more effectively should one occur. The main signs we’re seeing in 2022? The Federal Reserve has raised interest rates to offset inflation, making the price of things like rent and gas reach historic highs for consumers. With future interest hikes potentially in the works, we see interest rates rising as one of the first indicators of a potential recession.

Also among the signs, the S&P 500 (a stock market index tracking 500 companies listed on the stock market exchange in the US) is currently in bear market, meaning it saw a 20% drop as of May 20th. According to Latina finance expert Linda García, “What’s important to note here is that the stock market is always the first to drop and the first to begin making a recovery. This is because the stock market is forward looking. It identifies problems before other parts of the economy and it sees the recovery before them as well.”

Fund your Roth IRAs and 401ks

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We know, right? On top of saving and needing to prep for maybe losing your job, funding your retirement accounts seems a little off target. However, it is important to keep in mind that with the stock market taking a hit, stocks are relatively cheap right now to buy. This means that by funding your retirement accounts, you’re getting access to discounted stock prices - all the better in a recovered economy and future you!

This is all meant to help prepare our community for threats to our financial wellbeing. From what the experts are saying, it’s not a doomsday call, but it is a to-do list to help make you the most financially stable as possible, and whether in a recession or not, that’s always a good thing.

Need more guidance on your finances? Check out Luz Community partner SUMA Wealth. Join the Luz Community to access more and get yourself prepared for anything that comes your way.

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