Is your savings account in jeopardy? Decisions that could ruin you if there is a recession, according to experts

When a recession looms – as many, but not all, have projected is a real possibility under Donald Trump’s current administration – it’s easy to think your savings account is safe as long as you keep stashing money away. But some of the worst financial decisions happen when you’re trying to be cautious. That’s the irony of downturns: panic often feels like a plan.

If you’re worried your savings might be at risk, here are seven moves that experts say could quietly wreck your finances in a recession... with some thoughts (though not financial advice) on what to do instead.

Things to avoid ahead of potential recession

1. You ignore your emergency fund (or don’t have one)

Having money in your 401(k) or investments doesn’t help much when your car breaks down or you lose your job. Your emergency fund should be cash, easy to access, and separate from your retirement savings. Think three to six months of essential expenses, ideally parked in a high-yield savings account — not under your mattress, but not on Wall Street either.

2. You withdraw from retirement accounts too early

Cashing out your 401(k) to cover bills or debt might feel like a quick fix, but it comes with a 10% penalty if you’re under 59½, plus income tax. Worse, you lose out on compounding interest, which does the heavy lifting in your retirement plan. Short-term gain, long-term loss.

3. You quit your job with no backup

A recession is not the time to follow your dreams — unless your dream has health insurance and a steady paycheck. Quitting impulsively without a plan might feel empowering, but finding new work takes longer when companies are tightening budgets. If you’re burned out, fine. But job hunt while you’re still employed.

4. You make big purchases you don’t need

That new car, kitchen remodel or luxury vacation might feel like a reward for surviving tough times. But adding major expenses during economic uncertainty is risky — especially if you’re borrowing to cover them. If you can delay, do.

5. You panic and dump your investments

Market drops make people sell low and buy high — the exact opposite of what you’re supposed to do. If you ditch your investments when things get rough, you lock in losses and miss the rebound. Historically, markets recover. The question is whether you’re still invested when they do.

6. You ignore inflation’s slow burn

You don’t feel inflation the way you feel a layoff — but it chips away at your buying power all the same. A $4 coffee is now $6. A $100 grocery run suddenly costs $120. If you’re not adjusting your budget to reflect that, you’re probably saving less than you think.

7. You fall for lifestyle inflation

You got a raise — congrats. But if your spending goes up with your income, you’re not building wealth, you’re just buying fancier problems. Recessions reward the people who resist the urge to inflate their lifestyles. More money should mean more saved, not just more spent.

What can I do instead of these decisions?

Build your emergency fund. Track your spending. Stay invested. And don’t make any big changes without thinking through the long-term impact. A recession isn’t the time for bold moves — it’s the time for boring, solid ones.

Fingers crossed the worries are unfounded but it’s worth remembering that one thing worse than a shrinking economy is a shrinking savings account you could’ve protected.

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