In a sluggish economy or an outright recession, it's best to watch your spending and not take undue risks that could put your financial well-being and goals in jeopardy.

Below are several spꦡecific financial risks that you should avoid taking during a recession.

1. Co-Sign a Loan

Co-signing a loan is 🐟a risky commitment even in flush economic times. If the borrower does not make the required payments, the co-signer will be required to make them instead.

During an economic downturn, the risks associated with co-signing on debt are even ꧙higher, since both the borrower and the co-signer may face an elevated ꦚlikelihood of losing a job or a decline in business income.

That said, you may find it necessary to co-sign for a family member or close friend regardless of what is happening in the economy. In such cases, it pays to have some savings set aside as a cushion. Or, instead of co-signing, you might help with a 澳洲幸运5开奖号码历史查询:down payment or make a 澳洲幸运5开奖号码历史查询:personal loan rather than leaving yourself on the hook for a co-si𓂃gned loan.

2. Get an Adjustable-Rate Mortgage (ARM)

When purchasing a home, you have the choice of an 澳洲幸运5开奖号码历史查询:adjustable-rate mortgage (ARM) or a 澳洲幸运5开奖号码历史查询:fixed-rate mortgage.

澳洲幸运5开奖号码历史查询:Interest rates usually fall early in a recession and then rise later as the economy recovers. This means that the adjustable rate for a loan taken out during a recession is likely to rise once the downওturn ends. The fixed-rate loan at recession pricing 📖could be a better deal in the long run.

Conside🤡r the worst-case scenario: You lose your job and interest rates rise as the recession starts to abate. Your monthly mortgage payments go up, making it extremely difficult to keep current on the payments. Late payments lower your credit rating, making it more difficult to obtain a loan in the future.

A recession may be a good time to lock in a lower fixed rate on a mortgage refinance if you qualify. However, be cautious about taking on new debt until you see sign𒁏s that the economy is recovering.

3. Assume New Debt

Taking on new debt—such as a car loan, 澳洲幸运5开奖号码历史查询:home equity line of credit (HELOC), or student loan—need not be a problem in good times when you can make enough money t💧o cover monthly payments and still save for retirement.

But when the economy takes a turn for the worse, the risk that you will be laid off or lose business income increases. If that happens, you may have to take a job—or jobs—that pay less than your previous salary, which could eat into your 澳洲幸运5开奖号码历史查询:ability to pay your debt.

Taking on new debt in a recession i💙s risky and should be approached with caution. Pay cash if you can, or wait on big new purc🍨hases.

4. Take Your Job for Granted

D🅷uring an economic ꦗslowdown, even large corporations can come under financial pressure, leading them to look for cost cuts. All too often, that means layoffs.

Because 澳洲幸运5开奖号码历史查询:jobs become so vulnerable during a recession, workers can’t take finding another one f🍌or🎐 granted, so it is wise to think carefully before leaving a job when the economy is in a rough patch.

In addition, older workers retiring during a recession could see their income decline and their retirement portfolio suffer just as they start to draw it down. If the economy is 澳洲幸运5开奖号码历史查询:tumbling as you near retirement age, it’s important to weigh your options. You might decide to hang in there for another year or so.

5. Make Risky Investments

This tip applies to business owners. While you should always be thinking about the future a﷽nd ways to grow your business, an economic slowdown may not be the best time to make risky bets.

Early on in a recession 🌠is not the time to stick your neck out. Later, once the economy starts to show signs of a sustainable recovery, it will be time to start thinking big. 

Borrowing to add space or increase inventory may sound 🦩appealing—particularly since interest rates are likely to be low during a recession. But if business slows down more—as it may during a recession—you may struggle to ma🐟ke the payments on your debt.

Wait until interest ﷽rates start to tick upward and leading economic indicators for your market or industry turn up.

The Bottom Line

There’s no need to panic in response to an economic slowdown, but you should pay extra attention to your spending and 澳洲幸运5开奖号码历史查询:be wary of taking unnecessary risks.

Even in the midst of a significant economic downturn, there are many positive steps you can take to improve your situation and 澳洲幸运5开奖号码历史查询:recession-proof your life. These include adopting a realistic budget, establishing an 澳洲幸运5开奖号码历史查询:emergency fund, ▨and generatinജg additional sources of income if necessary.