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Ashley works with clients to bring strategy, structure, clarity and confidence to their global financial lives and keep it that way. ​In 2013, Ashley founded Arete Wealth Strategists, a fee-only financial planning and investment management firm for Australian/American expatriates.
March 25, 2020

How to Adjust Your Personal Finances for a Recession

Recessions are inevitable but so are recoveries. Here are some practical steps you can take to best prepare yourself, at all times, for a prolonged downturn.

Identify your Emergency Fund(s)

The general rule of thumb for the amount of an emergency fund is 3 months of funding per working member of the family. Of course, you should modify this to fit your family’s particular requirements. I would target having a total of 6 months of emergency funds for those in businesses acutely disposed to the impacts of social distancing.

  • Identify what liquid funds you have available but don’t derail goal-based investments by cashing them out and certainly don’t liquidate retirement funds unless absolutely necessary.
  • Desperate times call for desperate measures. You can access your ROTH IRA contribution amounts (not growth) penalty-free at any time.
  • Ideally, your emergency fund is in cash or invested defensively.


  • Secure a Line of Credit on your home, just in case, or
  • If over the age of 62, consider a Reverse Mortgage


Tidy up your budget - When the economy and markets are humming along it becomes tempting to let lifestyle inflation get away from you. Now is the time to review your spending to understand which non-essential areas of your budget can be cut in case of a slowdown.

  • Prepare a doomsday budget. Take the above-mentioned advice and notch further and identify all areas where you can cut if necessary….
  • Make sure you’re getting the best deals and prevent waste!
  • Review subscriptions -> In the app-based economy, it’s easy to get lost in the number of subscriptions one has and when they’ll renew.
  • Cable, phone and insurance providers ->  It's also worth putting in a phone call to your cable, phone and insurance providers to ensure you're getting the best rates. Many of the companies will negotiate with you for better rates. And the worst they can do is say no if you ask.


  • Payoff high-interest debt (credit cards, private student loans etc)
  • Refinance your mortgage


  • Make sure excess cash is ready to be deployed. I.e. account opened and funded.
  • Pay Attention to the financial news - do your own research and understand the true magnitude of losses.
  • The best way to prepare your portfolio? Set your strategy and stick to it
  • Invest in yourself - keep your human capital up to date and update those skills.
  • Don’t be afraid of one-to-one networking (or phone calls)

Household Maintenance

  • Make sure your major appliances are in good working order to avoid a costly outage. Consider signing up for a home maintenance plan/replacement plan.
  • Determine how much of assistance you could provide to family members if asked

Behavioral Biases

  • Beware of action bias - the tendency to want to do something, even if it’s shown to be ineffective or counterproductive.
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