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If you or your partner are worried about the possibility of an upcoming recession, take steps now to financially recession-proof your relationship. When you are prepared for coming financial difficulties, you may be able to weather them together with less strain and more confidence.
Consider taking these seven steps if you are concerned about future financial forecasts.
1. Agree on a Budget
Budgets are the foundation of financial health. One of the best ways to start acting like a team in the face of financial difficulties is to agree on a budget. Having budget contingencies ready to go in case of emergencies can also help you avoid the anxiety of coming up with a whole new strategy in the midst of a stressful time.
Plan a day to set up a budget when you don't have distractions. Try to revisit with a monthly "budget date night" to make sure the budget is still working for both of you. If there is a big change like a job loss, call an emergency budget meeting. It may be good to have a backup "bare bones" budget ready for a serious event that throws your budget for a loop, such as job loss, injury or illness.
2. Call a Pause on Big Purchases
Recessions don't last forever, but while they're happening—or even if they just seem likely—it may be a good idea to call a pause on big purchases that you don't immediately need. This could include purchasing a new TV or computer, or even buying a house or getting a new car.
You may also want to redefine what constitutes a "big" purchase. Perhaps before you only consulted each other about purchases over $100. For now, maybe you'll walk it back to discussing any purchase over $50.
Work together to wait out this pause and get back to these big purchase goals soon. Agreeing to a pause together will feel like you're on the same page and that both of you are in this together.
3. Shift Financial Priorities to Emergency Savings
If you have enough time to plan for a recession, do your best to start stashing emergency savings now. Perhaps you'll do so by living on one income. Or perhaps you'll both pad your emergency fund with money you would have usually spent on fun or a vacation.
However you do it, make sure you both make additional contributions to your savings when possible to help prevent trouble down the road.
4. Consider Living on One Income
Living on one income while stashing the other partner's earnings in savings is a strategy some couples use to build up their savings accounts. It's also a good strategy to use if you want to be prepared for potential layoffs.
Knowing that one of you could lose your job and that you'd still be all right financially may be worth the peace of mind.
5. Clarify Layoff Expectations
If one of you is laid off during a recession, what do you expect from each other? Discuss now whether it is OK for the laid-off partner to take a break to decompress. Should they immediately begin applying for jobs? What will you do if they can't find a job for a while?
Discussing this now can avoid resentment and frustration later.
6. Confront Negative Emotions Head-On
Finding yourselves in difficult financial straits can lead to many negative emotions. Sometimes these include depression, frustration, resentment and worse, which make having a functioning partnership difficult even outside of finances.
Letting these emotions fester between the two of you won't help the situation, and it may even set you back further due to a lack of communication. Make space for open and honest discussions even when things are difficult. Or consider seeking help from a professional, such as a financial therapist who can help you understand how money issues are impacting your relationship and what you can do to improve the situation.
7. Hunker Down Together
Remember that recessions end relatively quickly. Typically, they last around 17 months. And during that time, you're in this together.
Use a partnership mindset to face financial difficulties. Try to accept that this may not be the most fun or luxurious year of your life, but you've still got someone to spend these months with.
It may be time to hunker down, cut spending, take a staycation and put off a major purchase. But if you're with the person you care for the most, this time spent weathering the recession storm may be just as memorable as any other time.
Love Outlasts Recessions
Wanting to recession-proof your relationship is a loving step in the face of difficulties. Using money smarts as a tool to protect your partner and your family is a solid move regardless of the economic climate.
Recessions can take a serious toll on your finances, which could eventually impact your credit. Using Experian's free credit monitoring helps you stay up on your credit report and score, as well as alerting you when any changes are made to your credit report.