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Barclays, the global investment bank, recently predicted that a recession is likely on CNBC. Analysts from the brokerage believe the American economy will contract by 0.1% through the end of 2025 and they downgraded the global economic growth forecast for 2025 to 2.9%, down from 3.3% in 2024. Ajay Rajadhyaksha, global chairman of research for Barclay, noted that if trade tensions continue, there’s a chance that developed economies will enter a recession. The potential economic slowdown was attributed to various factors, including uncertainty around tariffs, data around the labor market and future interest rate decisions.

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While there are no guarantees that a recession will be announced in 2025, it’s crucial that you do your best to organize your finances for the worst-case scenario. Below are ways you can prepare for a recession right now.

Also here are the states most worried about a recession.

Be Cautious About Your Investing Approach

Barclays suggested that investors exercise caution and underweight “risk assets” in preparation for a possible recession. This doesn’t mean withdrawing from the stock market , but changing your investing approach to protect your funds. You’ll want to consider shifting your portfolio from volatile assets, like stocks or real estate, that could drop during an economic downturn, to safer assets.

Barclays recommended a more defensive investment approach, with an overweight position in global fixed income and higher cash reserves, until further clarity on trade policies is achieved.

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Cetin Duransoy, U.S. CEO of Raisin, said priorities are shifting fast as people are choosing security and control over growth with their funds right now. “We’re seeing more savers shift into fully insured options like high-yield savings accounts and CDs. Places where they don’t have to choose between protecting their money and growing it,” he said.

If you’re nervous about the possibility of a recession, you’ll want to change your investing approach. You want to be more practical about how you approach risk in 2025, since you never know what can happen next. You should be especially cautious if you have money invested that you’ll need to access in the near future for a significant expense like a wedding or home down payment. Even though CDs and bonds aren’t exciting, you don’t want to worry about losing your money during turbulent times.

Boost Your Savings

“Building up an emergency fund is crucial during times of uncertainty, so focus on saving up three to six months of living expenses in a separate account so it’s out of sight and out of mind,” said Andrea Woroch, consumer and money-saving expert.

Once you figure out how to be defensive with your stock portfolio, you’ll want to make saving up for a rainy day your main priority to ensure that you have money to bail you out in the worst-case scenario. When the economy tips into a recession, there’s no telling what can happen and you can’t ignore the reality that you could lose your job. This is why you want to be prepared by having the funds to take care of your bills so that you don’t have to rely on credit cards to get by.

Create a Financial Plan and Track Your Spending

Setting and following a financial plan is essential during challenging economic times because you want to be certain that you have enough money to stay on top of your bills. “It’s more important than ever to track where every dollar goes in your budget to avoid wasteful spending,” Woroch said. She suggested using the zero-based budgeting method so that you can assign a job to every dollar you earn, so you know exactly where your money’s going. The goal is to have some sort of financial plan so that you’re not constantly nervous.

Reduce Monthly Bills

Woroch suggested you spend time now reducing monthly bills so you have some extra breathing room in your budget in case of a possible recession. If you can reduce monthly bills right now, you’ll be able to save more so that you can get adjusted to living leaner if a recession does happen.

Here are the best ways to save on monthly fixed expenses:

Focus on Shorter-Term Financial Priorities

According to Austin Kilgore, consumer finance expert and analyst with Achieve, in the current economy, it may be wise to focus on the shorter term and determine where your vulnerabilities may be. For example, if you have an older vehicle, you should handle the maintenance now. If you have any medical or dental needs, you’ll want to address them now if your current employer offers health insurance.

Pay Down Credit Card Debt

When carrying credit card debt, you end up paying much more than the original purchase price of what you purchase. One of the best things that you can do to prepare for an economic downturn is to focus on paying down your credit card debt so that you have one less expense to stress about. You can pay down your lowest balance first for a quick win or focus on your highest interest rate if you want to take a mathematical approach.

Generate Extra Income

Kilgore said many people can take some time and effort to make a little extra right now and devote that to savings. If you have any concerns about possibly losing your job, then you’ll also want to tap into additional income streams to build up your bank account and to have a back up plan.

A few ways that you could increase your income now include:

While it’s challenging to predict what will happen in the economy, it’s important that you plan ahead so that you’re prepared for every possibility.

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This article originally appeared on GOBankingRates.com : A Recession Is ‘Likely,’ According to Barclays — How To Prepare Now