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By Kristin Myers, Editor-in-Chief

What's Happening Today

After yesterday's unexpected jump in the number of people filing for unemployment for the first time, recession anxieties have started to tick upward again. It's not guaranteed that the United States will in fact enter a recession, but most economists and business executives think it's likely coming either this year or next. And while there's nothing you and I can individually do to prevent a recession from happening, we can prepare our finances in case one comes.

So how financially ready are you for a recession? If you said "not ready at all," you aren't alone. In fact, 44% of U.S. adults said they aren't financially prepared for a recession, according to a new survey from The Balance.

Respondents with incomes of up to $50,000 were more likely to feel unprepared at 36% compared to 14% of those earning more than $75,000. And around four out of 10 adults expect their finances to get worse over the coming year, as inflation continues to hammer our wallets. More than a quarter of those surveyed said they have been "extremely" impacted by inflation, and 92% are cutting back spending thanks to those higher prices.

No matter the amount of income you earn, there are some changes you can make right now to better prepare financially. For example, increasing your emergency savings, paying off debt, and avoiding large purchases that you might not be able to afford later are ways to improve your chances of weathering a recession.

And if you're someone who isn't worried about job security and has money to spare, the stock market isn't necessarily something to avoid. In fact, with the markets down roughly 17% since the beginning of the year, this might be an opportunity for you to "buy the dips."

- Kristin

Editors' Picks

Rule of Thumb: How Big Should Your Emergency Fund Be? (The Balance)

Recession Dictionary: Your Guide to the Jargon (The Balance)

Consumers Shun Candles, Barbecue Kits as Budgets Tighten (Reuters)

Living Wage and How It Compares to the Minimum Wage (The Balance)

Cost of Living: How To Calculate, Compare, and Rank (The Balance)

Is It Time To Look for a New Credit Card? (The Balance)

Finance Goals for Your 20s (The Balance)

Term of the Day

Cost of Living Adjustment (COLA)

As the costs of goods and services in the U.S. continue to rise, including for necessities such as food, shelter, and medical care, earnings used to pay for them also need to rise. Cost-of-living adjustments (COLA) are income increases designed to help keep the amount of money coming in stay in proportion to the amount of money going out. If things cost more, you'll need more money to pay for them.

For example, the government may provide a COLA each year on Social Security benefits. The Social Security Administration's COLA adjustment for 2021 was 1.3%. For 2022, it is 5.9%. This means that Social Security beneficiaries will receive a 5.9% increase in benefits in 2022 compared to the 1.3% increase in 2021.

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