Skip to main content

Legal-Ease: An Attorney’s Perspective: 2023 Recession — How to Prepare

By January 28, 2023March 10th, 2023No Comments

Judd Matsunaga

Economists have been forecasting a recession for months now, and most see it starting early this year. Whether it’s deep or shallow, long or short, is up for debate, but the idea that the economy is going into a period of contraction is pretty much the consensus view among economists. (Source:, Why Everyone Thinks a Recession Is Coming in 2023, Dec. 23, 2022)

Recessions can be difficult to weather, but they’re not uncommon and should be considered in your regular financial planning. In fact, the U.S. has experienced 13 recessions in the last 100 years since the Great Depression. Typically, recessions are accompanied by high unemployment rates. Should unemployment rates rise from the current 3.7 percent to over 5 percent, several million Americans will lose their jobs.

With so much uncertainty in the world today, it is natural to wonder how you and your family will weather the storm. The area that causes the most amount of stress for people in this regard is finances. To help alleviate some stress during periods of economic uncertainty, here are four steps that financial experts recommend preparing for a recession. (Source:, “A Recession Is Widely Expected. Here’s How to Prepare,” Dec. 10, 2022).

  1. Try to Build an Emergency Fund

Whether the economy is surging or stalling, it’s important to have enough money set aside so you can still pay your monthly bills in the event of an unexpected job loss or other emergency. “Your goal should be to have an emergency fund that has enough money to cover three to six months’ worth of expenses,” advised Robert Gilliland, managing director and senior wealth adviser with Houston-based Concenture Wealth Management.

That said, you may want to pad this account with extra money now to factor in the higher cost of living as a result of inflation and the potential for a job loss during a recession. You’ll need every bit of it when the income stops flowing. While tapping into your emergency fund is never a decision you should make lightly, losing a job or being forced to live on a reduced salary certainly qualifies as a good reason to use some of the cash you’ve put away.

However, it’s important to rebuild your emergency fund as soon as your financial situation is more stable.

  1. Focus on Budgeting

Your monthly budget is a good place to start because you can see how much money you’re spending each month and on what. “Ask yourself: Where can I reduce monthly outflow?” says Gilliland. Even if job cuts or layoffs are looming, put as much cash into your emergency fund as possible.

Give up all the extras, including takeout and delivery. “Even cutting out small expenses, such as subscriptions to streaming services, are an easy way to save extra money that can be crucial for building an emergency fund,” he added.

  1. Pay Off High-Interest Debt (If You’re Able)

“The first thing I would tell people to do is to pay down high interest debt, like credit card debt,” said Marguerita Cheng, a certified financial planner. Normally, it’s important to do whatever you can to keep your credit scores intact, but during a recession, that may not be possible. Therefore, you might have to forego paying one or more of these bills, so it’s important you prioritize which bills you need to pay.

Make sure you pay your rent or mortgage on time and in full. You don’t want to face foreclosure or eviction. If you need a car to get to work, make your car payment. If you buy your own health insurance, be sure you pay your premium on time, so your policy isn’t canceled. If your health insurance is offered through your employer, you will continue to receive health insurance coverage even if your medical bills mount.

If you’re making your payments on time, you can also ask your credit card company or any other lender about lowering your interest rates. You’ll never know what agreement you and your creditor can reach if you don’t ask.

  1. Get Creative About Saving

Now is a good time to evaluate your entire financial picture, ahead of a recession, so you’re not caught by surprise. Think creatively about other ways to save more money. “For example, evaluating your insurance options to make sure you have the best option for your personal circumstances could mean the difference of several hundred dollars each year,” Cheng says.

Consider other ways to earn more money — be it asking for a raise or adding another revenue stream through a side hustle. If you own your own home, you’re sitting on a gold mine!!! Look into tapping into the equity in your home with a reverse mortgage. Why a reverse mortgage? Because you don’t have to pay it back.

Your kids may have told you not to take out a reverse mortgage on your home. That’s because they hope to inherit your home “free and clear” when you die. But, if paying the bills or buying the groceries continue to rise while your savings are dwindling, IT’S YOUR HOME. In cities like Los Angeles, you could take out $500,000 and still leave your kids $500,000 to inherit (According to

Judd Matsunaga is the founding attorney of Elder Law Services of California, a law firm that specializes in Medi-Cal Planning, Estate Planning and Probate. He can be contacted at (310) 348-2995 or The opinions expressed in this article are the author’s own and do not necessarily reflect the view of the Pacific Citizen or constitute legal or tax advice and should not be treated as such.