(TheDailyCurrents.com) – Are you concerned about a potential recessions knocking your life off track? If so, you aren’t the only one. A sizeable amount of the population is currently looking at the economic landscape as it stands today and are asking themselves what they can do to recession-proof their life.

It is true that no one can say with absolute certainty when or if a recession may hit, but it is best to prepare yourself for this outcome if and when it comes to pass. Today, we will go over a few of the various ways that you can begin to prepare your finances and your life for any possible recession.

Establish an Emergency Fund

It is ideal to prepare your finances for the future, and that means having an emergency fund that you can dip into if (and only if) an emergency strikes. Vanguard reminds us all of the importance of having a well-maintained emergency fund:

IF YOU’RE LIVING WITHOUT A SAFETY NET, YOU’RE LIVING ON THE “FINANCIAL” EDGE—HOPING TO GET BY WITHOUT RUNNING INTO A CRISIS.

It is vital to remember this when you are thinking about how serious you need to get about your emergency fund in order. You will have less stress and be able to live more fearlessly when you are not constantly worried about what will happen if a car breaks down or you have some other unforeseen emergency expense. Recessions often mean job losses, and you should prepare for that as well. Thus, holding at least 3-6 months worth of expenses is a great preparation step to take.

Have An Additional Income Source

It is wonderful to have a full-time job, but that alone is not enough to necessarily keep you safe. You may need to work on creating a side-income for yourself that can help you stabilize your income if things get rough.
Creating a side-income is easier today than at any time in the past. Many work-from-home or remote jobs are available for those who need to bring in a little extra money. For example, it might be useful to think about how you can take on a few of the potential roles to earn some side income:

• Food delivery driver
• Offering a service: photography, writing, website design, etc.
• Selling items via an online store
• Take on a part-time work-from-home job

These are just a few of the ways that people have worked to build an extra income stream for themselves. It allows them to break free from the cage of always have to rely on a single source for all of your income.

Manage Your Risk Tolerance

If you have investments (and you should), it is important to ensure that you have proper risk tolerance for those investments. You can begin to limit your risk by making sure you are diversified in your portfolio and that you only put your money to work in investments that you fully understand. After all, if you are putting money in investments that don’t make sense to you, then you probably taking on far more risk than what is appropriate for you.

Taking some risk off of the table during recession times means that you may take less of a hit on your portfolio. Riskier assets tend to fall the hardest during a recession. Therefore, if you are invested in speculative things such as penny stocks, cryptocurrencies, and the like, then you might want to unwind those investments before the recession begins to take hold.

Overall, recessions are times when you need to buckle down and prepare yourself for the worst possible outcomes that could emerge in these situations. If you do that, then you may discover a greater sense of peace of mind regarding your risk tolerance in the midst of a recession.