Ramit Sethi Has These 3 Tips for Getting Through a Recession

It pays to take his advice to heart.

Is a recession in the cards for late 2022 or early 2023? That's the big question on a lot of people's minds.

The Federal Reserve has been raising interest rates in an effort to slow the pace of inflation. But in doing so, it's making more borrowing more expensive for consumers. If consumer spending declines a lot, it could lead to an economic downturn. And that could, in turn, put more people at risk of losing their jobs.

If you're worried about a recession, you're no doubt in good company. And one of the best things you can do to get through one is to shore up your emergency fund. But financial expert Ramit Sethi has his own set of tips for managing through a recession, and they're definitely worth listening to.

1. Take care of the people who are most important to you

If a recession hits, it could impact people you care about, like close friends and family. Sethi says it's important to check up on those people and figure out ways you can support each other.

Imagine a recession hits and a close friend loses their job. You might offer to help them redo their resume, or you might offer to help pick their kids up after school so they can attend a job interview.

On the flipside, you shouldn't hesitate to ask for help if you end up needing it. If your hours at work are cut and money starts getting tight, you might consider reaching out to close family and friends to ask for help in finding part-time work to replace your missing income.

2. Don't sell off investments in a panic

Stock values don't always decline during a recession. But they can. And if that happens, it's really important that you leave the investments in your IRA or brokerage account alone.

If you sell off investments when they're down, you'll lock in losses. There's no getting around that. But if you give the market and economy time to recover, you may find that you don't end up losing a dime in your IRA or brokerage account after all is said and done.

3. Keep looking for new career opportunities

You may or may not get laid off if a recession hits. But even if you manage to keep your job, it's a good idea to position yourself to pursue new opportunities. That could mean learning a new skill that makes you a more valuable employee, either at your current job or a different one. It could also mean refreshing your resume, updating your LinkedIn profile, or doing anything else that makes you a stronger job candidate.

We can't say with certainty when our next recession will hit. And even if economic conditions do worsen later this year or early next, that downturn could end up being both mild and short-lived. But it's still wise to prepare for a recession before things take a turn for the worse. And following Sethi's advice could end up making a tough period much easier.