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How Women Can Prepare for a Recession (Whether It Happens or Not)

Economic downturns can seem scary. Many people, especially women, don’t feel ready. Here are ideas for how to prepare for a recession.

04/18/2023
Woman hugging another woman while man watches. All are smiling and around a dining table.

Key Takeaways

However its defined, a recession can mean a slowing economy, higher unemployment and financial challenges for individuals.

Considering their financial state in the event of a recession, women are more likely than men to feel unprepared.

We offer seven tips to help women—or anyone—prepare for a recession and improve their financial outlook whether one happens or not.

According to a recent survey, women are 20% more likely to feel unprepared for a recession.1 But you can plan ahead by managing your saving, spending and staying invested.

What Is a Recession?

A widely accepted recession definition is two consecutive quarters of declines in the nation’s gross domestic product adjusted for inflation. The National Bureau of Economic Research (NBER), a nonprofit organization that has become the de facto arbiter of recession beginnings and endings, uses an extended definition.

NBER defines a recession as “a significant decline in economic activity that is spread across the economy and that lasts more than a few months.”

However you define it, recession challenges typically include higher unemployment, decreased consumer spending and tighter credit availability as economic growth slows down. Even if worried about a recession, women—or anyone—can take action to prepare their finances for whatever is around the corner. These seven steps may help improve your financial outlook.

Negotiate Higher Pay

Traditionally, women have been less likely than men to negotiate higher salaries. In one study, 57% of male Carnegie Mellon University graduate business students negotiated their starting salaries, while only 7% of women did. And it shows: In this study, men’s starting salaries were 7.6% higher.2

Research whether your current salary is comparable to others in your field and your experience level. It’s probably better to have a pay-raise conversation with your boss sooner than later if an economic downturn is coming. Or you could consider looking for a more lucrative job. More income may help you better prepare to weather a potential recession. It may also help you close investing gaps for your future.

More income may help you better prepare for a recession. If you can negotiate more money, apply it to our other tips.

Boost Your Savings

If you don’t have three to six months of expenses reserved for an emergency, focus on building your savings by setting up an emergency fund. Layoffs and a lack of available credit can often accompany a recession. With ample savings, you may not worry as much about getting through a potential cash-flow squeeze.

One of the most effective ways to increase your savings is to set up an automatic investment from your paycheck or bank into a liquid or cash equivalent account such as a money market. With high inflation, it may feel like you are saving as much as you can already, but if you review your budget, you may find some luxuries you won’t miss, such as streaming subscriptions, a gym membership or extra restaurant meals. Also, shop with cash-back coupon apps and send the money you save to your emergency fund.

Delay Big-Ticket Purchases

For most people, even a potential recession translates into financial uncertainty. There are no guarantees about how a shift in the economy might affect your finances, so avoiding or delaying large purchases may be wise.

Many women are already adopting this mindset. A recent report shows 71% of women say they will put off big purchases entirely. Another 24% of women say they would avoid borrowing for large purchases and only pay cash.3

Pay Down High-Interest Debt

High-interest debt from credit cards or personal loans can substantially eat into your monthly budget. If you carry debts like these, create a plan to pay them off as soon as possible. You might consider consolidating debt through a home equity loan or using a balance transfer to a new credit card with a low- or zero-interest introductory rate.

Paying down debt, especially when it carries onerous interest rates, can help you keep more of your monthly earnings and better prepare for economic or financial difficulty.

Stay the Course With Investing

Economic uncertainty can make it tempting to cut and run from your investments. But sticking to your investment plan through a downturn is likely the sensible alternative. By remaining invested, you’re in a potentially better position to benefit when the markets eventually turn.

Rather than changing course, focus on time-tested investment strategies of diversification and keeping a long-term view rather than short-term planning. Fortunately, many women appear to be doing well in this area: Despite turbulent economic news, 92% of women plan to maintain or even increase their contributions to retirement accounts.3

Reframe Your Financial Decision-Making Role

Married or partnered women often share financial decision-making with their spouses; some rely on a partner for financial support. For example, more than one-third of partnered women say they are entirely (15%) or somewhat (20%) financially dependent on the other person.4 Whether you share the financial burden or not shouldn’t mean opting out of financial decisions. You’ll be more prepared for a recession if you actively participate in financial planning.

While women may have traditionally deferred to their partners on financial tasks and choices, that’s no longer the case. The State of Women 2022 report showed that 80% of currently partnered or single women prefer making financial decisions rather than leaving them to a partner.5 Perhaps women are taking a more active role because they’re increasingly responsible for earning money: The same study showed that 51% of partnered women report they are the primary household breadwinners. In comparison, 49% said their partner was the main wage earner.

More women may be taking an active role in financial decisions because they earn more money: 51% say they are the primary breadwinner; 49% say their partner is.⁵

Stop Worrying

In general, women spend more time worrying about money than men. In fact, 59% of women say they stress about money more than once a week, compared with 55% of men. Also, 43% of women actively worry about money at least once a day, while only 36% of men say the same.5 Rather than losing sleep over your money, taking control of your financial life may help you rest easier. Start by taking some of the steps above to prepare for whatever the economy may bring—even a recession.

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Schulz, Matt. “68% of Americans Don’t Feel Financially Prepared for a Recession,” Magnify Money. July 11, 2022.

Thompson, Kelli. “5 Ways Women Can Negotiate for Better Pay,” Next Avenue. August 26, 2021.

Alliance for Lifetime Income. “Two-Thirds of Women See a U.S. Recession Ahead, but Plan to Double Down on Retirement Savings.” November 14, 2022.

Ballard, Jamie. “Over one-third of coupled women are financially dependent on their partner,” YouGov America. May 27, 2021.

Ellevest. The State of Women’s Financial Wellness in 2022.

This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, employment, legal or tax advice.

You could lose money by investing in a mutual fund, even if through your employer's plan or an IRA. An investment in a mutual fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.

Diversification does not assure a profit nor does it protect against loss of principal.

Investment return and principal value of security investments will fluctuate. The value at the time of redemption may be more or less than the original cost. Past performance is no guarantee of future results.