After the last major economic downturn, hearing that the next recession might be around the corner (or already in our midst) can feel unsettling. Despite the buzz of impending recession fluttering across the media, the reality is that so many factors simultaneously influence the U.S. economy no one can truly predict its timing.

Making a few key choices now to recession-proof your finances may keep you above water if you’re worried about an economic downturn headed our way.

1. MANAGE YOUR SPENDING WISELY, STARTING NOW

Cash flow is money coming in and money going out. The "going out" part is probably the easiest, fastest thing to influence.

Take a look at your current expenses, and see what you could immediately cut. This is likely going to be things like entertainment, restaurants, luxury purchases, and other shopping.

Then go a level deeper: What might you not be able to eliminate entirely, but could easily spend less on? That might be groceries, home supplies, or things like transportation or fitness (if you switched from driving to biking, for example, or exchanged your exclusive and expensive gym membership for a cheaper option).

If you spend less now, that also frees up more cash flow for you to direct toward savings and investments — another great way to recession-proof your personal finances.

2. BOOST YOUR EARNINGS, THEN YOUR SAVINGS, WHILE YOU CAN

There are a number of ways you can increase your income. The right path for you will depend on your situation, your skills, and your interests, but here are a few suggestions to consider:

• Ask for extra shifts or overtime hours

• Look for part-time positions you can take on in addition to your current obligations

• Explore freelancing or consulting on the side

• Take on more responsibilities or projects at work, and use that as leverage to help negotiate higher pay (or consider taking your skills elsewhere while companies are still hiring)

And whether you increase your income or reduce your spending (or both), you'll have additional cash flow available each month. You can use that extra money to:

• Pad your emergency fund, especially if you feel concerned about a recession and potentially losing your job

• Increase contributions to your retirement accounts to build long-term financial stability

• Add to your investment portfolio outside of retirement; for example, you could open and fund a brokerage account (or increase the amount you invest each month if you already have a portfolio outside your retirement savings)

3. KEEP INVESTING

To recession-proof your finances (and investment portfolio), you need to continue to invest even though the market is dropping. In fact, especially when the market falls!

If you only invest when the market is going up, times are good, and everyone feels confident, you're buying at increasingly higher prices. And if you don't keep investing when the market falls, then you never take advantage of the lower prices the market offers.

It can feel scary to push your hard-earned cash into the stock market or real estate when the value of your investments is dropping, but wise long-term investors know that corrections, bear markets, and recessions are actually opportunities to buy assets at lower prices.

4. REVIEW YOUR SKILLS AND REFRESH THEM AS NEEDED

Most people fear recessions because they increases the risk that you'll lose your job and therefore your much-needed income. You can help recession-proof your finances by ensuring that even in a tight labor market, you remain a vital resource.

Review your skills and knowledge and compare that with the current market to see where you might be able to fill a need, or to understand what you might need to catch up on to stay relevant for open positions.

This applies if you're self-employed, too. Do you need to brush up on the latest trends in your field? Are there any training or education opportunities available, or certain clients or projects you can take on now to expand your experience?

5. AVOID RASH (OR EXPENSIVE!) FINANCIAL DECISIONS

Now is not the time to make crazy leaps into the unknown with your money, or to take uncalculated, unnecessary risks.

This is especially true for any financial decision that is going to tie up a lot of your cash flow, limit your liquidity, or set a very high fixed cost in your budget. 

If you can hold off on very large financial decisions that might put you in a precarious situation, delay those. In the meantime, you can work on building up your savings and increasing your assets through investment contributions.

Ultimately, one of the best ways to recession-proof your finances is to keep perspective. Don't make a short-term decision on what should be a long-term play — and remember that recessions themselves are short-term.

Whether or not we're in for a recession in the near future, staying focused on the big picture and being proactive are two key ways to safely navigate whatever comes our way.

Want more tips on how to recession-proof your finances? We recommend these podcasts by Brian Buffini:

Recession Proof Your Money Part 1

Recession Proof Your Money Part 2