Threats to the U.S. economy have significantly increased in the first four months of 2022, leaving many investors wondering how best to protect their portfolios. From the war in Ukraine and rising interest rates to sky-high inflation and falling economic growth, warning signs of a potential economic downturn are plentiful, and both Wall Street and Main Street have taken note.

There are some good reasons to remain alert. On Tuesday, researchers from Deutsche Bank warned that a “major recession” is coming to the U.S. spurred by the Federal Reserve’s plan to cut inflation, and that the “coming recession will be worse than expected,” according to CNN.

On top of that, the Commerce Department reported Thursday that the U.S. economy shrank 1.4% in the first quarter of 2022. However, Ian Shepherdson, the chief economist at Pantheon Macroeconomics, said “this is noise, not signal,” CNBC reported.

As inflation soars to a 40-year high, consumer confidence dips, and the Federal Reserve looks on track to hike rates at the fastest pace since 2005, economists’ top concern is that the U.S. financial system’s rug might be ripped out from underneath, pulling away too much stimulus at a time when demand could also falter.

Roughly 80% of U.S. adults say they believe a recession is coming this year.

Here are seven tips recommended by experts to help make sure your finances are recession-proof:

Pay down high-interest credit card balances

When emergencies hit, you’ll want to eliminate as many of your monthly expenses as possible, and among the costliest ones for your budget are high-interest debt payments.

Downsize to a More Frugal Lifestyle

Downsizing and learning how to live frugally can be a great strategy, as it helps increase savings and prepares you for a new lifestyle when a recession hits.

Build Your Emergency Fund

Though conventional wisdom recommends having three to six months of your essential expenses tucked away in an emergency fund, the pandemic has led some people to try to save more.

Have Additional Income

Even if you have a great full-time job, it’s not a bad idea to have a source of extra income on the side, whether it’s some consulting work or selling collectibles on eBay. Diversifying your streams of income is as important as diversifying your investments.

Be Real About Risk Tolerance

Investing gurus may say that people in certain age brackets should have their portfolios allocated a certain way, but if you can’t sleep at night when your investments are down 15% for the year and the year isn’t even over, you may need to change your asset allocation.

Have an emergency plan for investments

Unfortunately, recessions often coincide with downturns in the stock market. If you have a 401(k), or any other types of market investments, consider creating an emergency plan for what you should do if a recession hits and the market crashes. Consult a financial professional for advice on what plan is right for you.

Try to find a “recession-proof” job

While it’s not easy, having a recession-proof job could ease your anxiety if the economy begins to struggle. Historically, occupations that provide essential services could see less of an impact if a recession causes companies to reduce their employee numbers.

Finally, develop a plan for your portfolio that suits your goals, such as retirement in five years. Don’t let the short-term terrors of the stock market scare you into making drastic moves, such as yanking all your money out of stocks and pouring it into cash.

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