Shore up your finances before the next recession hits: Here’s how

A new survey of corporate finance chiefs finds that recession fears remain in the background as expectations for economic growth wane. Experts say Americans should take steps now so their personal finances will be able to weather the next downturn.

On the heels of a fourth-quarter GDP report that found the economy growing at a slower rate, the first quarter survey of the CNBC Global Chief Financial Officers Council found that 91 percent of CFOs at American companies don’t anticipate a recession in 2019; not one respondent answered yes in response to the question (the remaining 9 percent said they were unsure).

For the first time in nearly three years, the Council lowered its view of the U.S. economy from “improving” to “stable.” And despite the early rally in stocks this year, more CFOs believe the market is likelier to fall than to continue rising. More than four in 10 predicted that the Dow will fall below 22,000, while one-third predicted a rally that would send the benchmark index over 27,000.

Experts in financial planning say there are two big messages here for the average American: Use this window of opportunity to prepare your savings, investment, and debt burden for the next economic cycle.

“It’s always good to be prepared for a storm. Whether it’s a recession or just a moderate downturn in the economy, it’s a good idea to have things ready,” said Bruce McClary, vice president of communications at the National Foundation for Credit Counseling.

Practically speaking, this means shoring up your household balance sheet. “Now is the time to be paying down debt, boosting your savings, and putting yourself in the financial position to better weather an economic storm,” said Greg McBride, chief financial analyst at Bankrate.com.

The first step is paying down debt, McClary said. “Look at how you’re managing your debt and make a plan to pay off high-interest credit card debt,” he said. “Average interest rates right now are at historic highs. It’s very costly and gets in the way of savings.”

If you’re not paying money to service high-cost debt, you have more opportunity to save money, which most Americans aren’t doing to the extent that they should. In an NFCC poll conducted last month, 70 percent of respondents said they had less than a month’s worth of savings. “Right now most Americans are not in a good place when it comes to personal savings,” McClary said. Ideally, he said, you should have three to six months’ worth of income set aside, but any amount by which you can increase your cash cushion is good.

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