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Are we destined for a recession in 2023? Many financial experts seem to think so. Worse yet, some are of the opinion that a 2023 recession could be long and ugly, as opposed to a quick downturn.
Clearly, that paints quite the upsetting picture. But before you start panicking, realize that these are simply predictions, not guarantees. There's a chance the economy won't sour in 2023, and there's also a chance that if a recession hits, it will be fairly short-lived.
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But still, it's a good idea to prepare for a recession in case things do take a turn for the worse in 2023. And former Amazon CEO Jeff Bezos has some solid advice for getting through a downturn.
It pays to conserve cash
The more money you have in savings leading up to a potential recession, the better equipped you'll be to get through a period of upheaval. So it's best to do what you can to conserve cash. Doing so, says Bezos, will allow you to "take some risk off the table."
One good way to shore up your savings, says Bezos, is to put off large purchases for the time being. This means that if you were thinking of upgrading to a new car in the next few months, hold off, provided your existing vehicle still runs. And rather than buy new furniture or appliances for your home, stick with the ones you already have and put the money you would've spent into your savings.
Incidentally, this advice from Bezos doesn't just apply to everyday consumers. It also applies to small business owners. Specifically, it's wise for small businesses to avoid large capital expenditures during this current period of uncertainty.
Make sure your emergency fund holds up
A robust emergency fund could get you through a crisis -- like the loss of your job. And to be clear, if a recession does strike in 2023, layoffs could become common. That's just a natural byproduct of economic downturns.
That's why it's crucial to have a solid level of savings -- in case you need to live off of your personal cash reserves if your paycheck disappears. And so it's important to make sure your emergency fund is in good shape.
That means, at a minimum, having enough cash in the bank to cover three full months of essential bills. But for better protection, it pays to aim higher.
If economic conditions deteriorate, it could take months to find a new job after losing one. So if you can sock away enough cash to cover more like six months' worth of bills, you'll be in even better shape.
We can't say with certainty that a recession is coming in 2023, but it's important to acknowledge that possibility. And it also pays to heed the advice Bezos has given. Now's really not the time to be making large purchases if your savings could use a boost. And holding off on those purchases could spell the difference between riding out an economic downturn unscathed and landing in dangerous debt.
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We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Maurie Backman has positions in Amazon. The Motley Fool has positions in and recommends Amazon. The Motley Fool has a disclosure policy.
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