Recession Looming? Here Are 3 Smart Money Moves Millennials Should Make (Plus 1 Major No-No)

You’ve read the predictions: According to credible economists and research firm Ned Davis, there’s a 98 percent chance of a global recession in 2023. It’s tempting to either panic or throw up your hands in defeat. But according to the experts, there are smart, strategic tweaks to your finances you can make in order to set yourself up to weather the storm. We asked Priya Malani, founder and CEO of Stash Wealth, a financial planning firm for millennials, for her advice.

Repeat after us: Investing and emotions do. not. mix. In other words, fear should never be the driver of any rash money moves—and per Malani, it’s important to remember that when markets go down, they always eventually go back up. “It’s so natural to panic when you read the news, but it’s so much more important to stick to your investing strategy,” she explains. The best way to brace yourself for impact? Her advice is not to pull out, but to keep your investment portfolio balanced and diversified (i.e. you’re not all in on crypto) so you don’t go down with the ship just because one of your investments tanks.

“The default response I always hear is that there is no place to cut back,” Malani says. Her recommendation: Pull up that bank account and credit card statement and comb through it line by line. Pause a subscription service (anything from Netflix to Rent the Runway); get to the bottom of those random fees you were assessed. It can feel like it won’t make a dent, but in reality, it could add up to several hundred dollars saved—and put into an emergency fund.

With interest rates going up (which often coincides with a recession), Malani thinks it’s a good time to articulate any future savings goals—say, a kitchen reno or a major vacation—and automate setting cash aside in a high-yield savings account. Malani recommends Ally Bank, where you’ll likely get around 200 times higher interest than you would at a brick-and-mortar bank. To start, simply figure out a rough estimate of what your goal is going to cost, and how much you can take out of each paycheck to get you there—then automate the transaction.  

With a recession looming, you might be tempted to treat your retirement plan like an emergency fund. It’s not, Malani says, and not only would this action undermine all the effort you’re putting in to getting on track for retirement, but if you lost your job, you’d be without work and simultaneously required to pay back your loan. (This is almost always a requirement when borrowing from your 401k, she explains.) “Avoid this double-edged sword at all costs,” Malani says. “Instead, continue building that emergency fund. [I] recommend two to three months worth of fixed expenses.”