Jean Chatzky Has This Advice for Americans Worried About a Recession

It's worth taking to heart.

Will the U.S. economy reach recession territory by the end of 2022? At this point, it's a distinct possibility.

Inflation has been rampant for months, and it's causing low and middle earners in particular to fall behind on their bills. As such, the Federal Reserve is doing its part to slow the pace of inflation by moving forward with interest rate hikes.

The logic is that if it becomes more expensive to take out a loan to finance a purchase or pay off a credit card balance, consumers will start to cut back on spending. If that happens to a moderate degree, we could end up in a great spot where living costs start to come down without too many negative repercussions.

But any time borrowing rates rise to a drastic extent, there's potential for a giant pullback in consumer spending. That's the concern right now. If higher interest rates fuel a dramatic decline in spending, it could set the stage for a full-blown recession.

If that's something you're worried about, you're not alone. But rather than spin your wheels worrying about a recession, financial expert Jean Chatzky has some great advice worth following instead.

Focus on your personal economy, not the broad one

It's true that when economic conditions decline across the board, people can get hurt individually -- such as by losing their jobs. But Chatzky told CNBC that fixating on a recession isn't a good use of your time. Instead, she said, think about your personal financial picture and take steps to improve it.

That could mean putting yourself on a budget to help ensure you spend less money than what you bring home. It could also mean boosting your savings to make sure you have a decent chunk of cash in your emergency fund.

How much emergency savings do you need?

A big part of making it through a recession unscathed is having a solid level of emergency savings. If you're a one-income household, a good bet is to sock away enough money in savings to cover six months of living costs.

But that isn't to say that if a recession hits and you lose your job, you're guaranteed to be out of work for half a year's time. Some recessions are more mild than others, and there's no reason to anticipate a massive unemployment crisis like the one that occured back in the spring of 2020, when the pandemic first hit.

Prepare, but don't panic

All told, we don't know how our next economic recession will play out or when it will hit. But it's important to recognize that recessions aren't such an unusual occurrence. They're actually part of a normal economic cycle. And as long as you take steps to get through one by building adequate savings, there's no reason to lose sleep over the idea of one.