Making Money in a Recession: How to Thrive Financially During Challenging Times

No one likes to think about a recession, but it is essential to be prepared for the possibility that tough economic times may come. It can be challenging to make money during a recession, but if you are intelligent and strategic, there are ways to thrive financially, even in challenging times. In this blog post, we will discuss some of the best strategies for making money in a recession so that you stay on top of your finances no matter what the economy throws at you.

While our coaching expertise is business growth, this article focuses primarily on making sure that you, as a leader, are financially stable personally. Having your personal finances in order not only reduces stress, but it enables you to be more clear-headed in your business decisions, and setup both your business and family for long-term financial success.

How to make money in a recession?

The global pandemic has spurred an unprecedented economic downturn in many industries and geographic regions, leading to the question: How can I make money in a recession? Personal finance is an incredibly important part of most people’s lives, and it can be hard to manage when faced with a financial crisis. During times of economic hardship, there are some strategies you can use to help keep your finances afloat.

One way to make money during a recession is by taking advantage of stock market fluctuations. While investing in the stock market carries certain risks, it also offers potential opportunities for profit as markets become volatile during recessions. When the larger market drops, stock prices may plummet, creating ideal conditions for buying low and selling high when the market rises again.

Another way to make money during a recession is to look for alternative income sources. Even if you run a business, this could be the time to expand into new markets, acquire a small business that is complementary to yours and would expand your client base or service offerings, invest in real estate that would bring in consistent rental income, or even start that next side hustle that your entrepreneurial brain has been thinking about.

Karie Kaufmann

12 Ways to Make Money in a Recession

1. Build an emergency fund

Building an emergency fund is a great way to make money during times of volatility and recession. A bear or down market can occur when economic activity slows dramatically, and stock prices drop. During these times, the National Bureau of Economic Research (NBER) recommends that individuals build up their emergency funds to ensure financial security. An emergency fund provides funds for unexpected costs and a cushion against income disruptions due to economic changes.

An emergency fund can also help protect your assets from being drained during challenging economic periods. When markets are volatile, and stock prices fall, people may be tempted to sell off their investments at a time when they should not be doing so. An emergency fund allows you to hold onto your investments and wait for the markets to improve.

Overall, building an emergency fund is a great way to not only protect yourself, but also to put you in the position to leverage opportunities for financial gain during times of volatility. To get started, create a budget and set aside funds each month into a high interest account that is designated for emergencies.

2. Invest in recession-proof industries

When investing during a recession, one of the wisest approaches is to focus on sectors considered ‘recession-proof’. This means targeting industries which tend to remain relatively stable and profitable regardless of economic conditions. Typically these sectors include consumer staples, utilities, health care, and technology.

Consumer staple stocks involve products or services essential for everyday life, such as food, beverage, and personal care items. These companies typically have strong revenue streams and high margins even in an economic downturn.

Utilities are another sector that can weather a recession due to their essential services. These companies provide electricity, gas, and other services that people need regardless of economic climate.

Healthcare stocks also do well even during economic turmoil, as these facilities are necessary for a functioning society.

Finally, technology stocks also tend to perform reasonably well during recessions as they have become increasingly intertwined with everyday life. Rather than taking risks on cutting-edge technology, look specifically for tech companies that offer products or services that people use regularly regardless of the economy’s state.

When investing during a recession, researching sector performance and finding companies considered ‘recession-proof’ can be an excellent way to make money. By targeting consumer staples, utilities, health care, and technology stocks, investors can gain exposure to industries which remain relatively stable even when the rest of the market is on the decline.

3. Use Dollar-Cost Averaging

Dollar-Cost Averaging (DCA) is an investment strategy of regularly investing a fixed amount of money in the stock market, no matter the market. During a recession, this can be beneficial, as it helps to smooth out any volatility in the market and may produce better returns than investing all your money at once. This is because when markets are down, DCA allows you to buy more shares for less money and vice versa when markets are up. This means you can take advantage of lower prices during a recession and get more bang for your buck.

Furthermore, by investing regularly during a recession – regardless of whether the market goes up or down – investors can benefit from dollar-cost averaging over time, as it reduces the risk of buying high and selling low. As such, it can be a great way to capitalize on the down market by taking advantage of lower prices and building a diversified portfolio over time.

Overall, dollar-cost averaging is an effective investment strategy for making money during a recession. It allows investors to buy more shares for less money in down markets and reduce risk by spreading out their investments over time. This approach allows investors to benefit from lower prices during recessions while protecting themselves against potential losses.

At the same time, however, it’s important to note that DCA has risks – mainly when investing in volatile markets. So the key is consistency – not trying to time the market. Research shows that, over the long run, those who invest consistently using a DCA approach will outperform those who attempt to time the market and buy/sell and the (seemingly) optimal time.

4. Minimize High-Interest Debt

2023 is the year to get serious about minimizing your high-interest debt. With the current economic downturn, it’s more important than ever to keep an eye on how much interest you are paying and start looking for ways to lower it. Paying off high-interest debt can save you money and help you make money by freeing up funds that can be used for other things, such as investments. Start by reviewing your financial situation and identifying areas to cut costs or refinance loans with better terms. Consider consolidating multiple credit cards into one loan with a lower interest rate or look into transferring balances to take advantage of promotional rates. Researching personal loan options might also be worthwhile if refinancing isn’t an option. Taking action now can help you maximise your money in 2023 and beyond.

5. Work on Your 401(k) or Retirement Contributions

During a recession, having a good strategy for investing and saving your money is essential. Contributing to your 401(k), or other pre tax retirement plan, is an excellent way to save for the future while taking advantage of tax deductions. Contributing to your 401(k) can also help you stay ahead of inflation and protect your savings from market volatility.

By contributing to your 401(k), you’ll be able to benefit from tax-deferred growth, which means that your earnings will not be taxed until you withdraw them in retirement. You may also be able to take out loans against the funds in your 401(K), which is generally not worth the cost and penalties, but it can give you access to cash if needed in an emergency.

Borrow money

6. Prepare to borrow money

Preparing to borrow money can help you rebound your finances when the market is in a bear market. This is because borrowing money allows you to access and invest funds in stocks, real estate, or other assets that will bring returns when the market turns around. It allows you to take advantage of sudden price movements or significantly discounted investment opportunities, and profit from them.

Borrowing money during a recession can have its risks, however. Unless done correctly and with careful consideration of market conditions, it could result in losses if investments don’t turn out as expected. Therefore, planning carefully and paying attention to market trends before making any decisions is essential. It’s also important to consider the potential impact of debt on your credit score and ensure you can pay off the loans promptly. With the proper preparation and strategy, borrowing money during a recession can be profitable and help you emerge from an economic downturn ahead of where you otherwise would have been, had you merely hunkered down.

7. If your mortgage or other loans are close to term, renegotiate now

If you have a mortgage or other long-term loan that is close to being fully paid off, now is an ideal time to renegotiate the terms of your loan. This can be particularly helpful in times of recession, as it could save you thousands of dollars and even help increase your financial security. When renegotiating a loan, consider talking to your lender about reducing the interest rate, extending the loan term or changing to a more flexible repayment plan. These small changes can make a big difference when saving money during difficult economic times. Don’t forget that if you decide to renegotiate your loan terms, ensure you understand all new conditions and fees associated with them before signing anything!

8. Create Additional Sources of Income

The key to creating additional sources of income during a recession is to generate passive income. Passive income is money earned without actively working, such as through investments or owning rental properties. It can be an excellent way to create a steady cash flow stream that can help supplement your existing income. Investing in real estate and renting out the property is one way to build passive income. Another option is to purchase dividend-paying stocks or other investments that provide regular payouts.

Finally, you may consider investing into your own business growth, if your industry is primed for growth. Or start a new business that can operate on low overhead and provide a steady stream of cash flow.

Whatever strategy you choose, having multiple income streams can be incredibly beneficial during challenging economic times, like a recession. With the right plan and dedication, you can create additional sources of income that will be invaluable during tough times

9. Plan for Future

It’s easy to be short-sighted when the market takes a dip, and preservation-thinking can take priority over planning for the future. However, it’s critical to keep a long-term mindset, even while taking care of short-term needs.

While many people may think that the only way to do this is through traditional investments in the stock market, other options can be just as effective and often more recession-proof. Bull markets are not always guaranteed, but they may be something to consider when attempting to make money during tough economic times. Investing in real estate or starting a new business might take time to pay off, but if you can leverage the ample opportunities in a down market, the payoff will be even bigger when the market rebounds.

Additionally, investing in non-traditional assets such as gold or alternative currency, can provide additional protection against inflation and deflationary cycles.

10. Enhance your market value

A tough market separates the true professionals from the rest. With more businesses competing for a smaller buying pool of customers, adding value is the way to stand out.

If you’re experiencing a slower season in business, take this opportunity to make business improvements or enhance your skills.  Additionally, networking is essential to success in any economy – so use this season to deepen relationships with key clients, partners, referral sources and mentors. Taking such steps ensures that you remain competitive and valuable even when times are tough.

11. Sell unwanted or unused items

This is a good time not only take stock of unwanted/unused items around the house, but also around your business!

Slow moving inventory? Have a fire sale to clear it out and generate some cash. Equipment you no longer need?  Sell it to free up cash to invest elsewhere. Accounts that don’t fit your ideal client profile? Perhaps you can sell them to a competitor to free up your internal resources for higher-value work.

Even making donations can provide a worthwhile tax deduction, while supporting others in need.

12. Don’t panic — recessions don’t last forever

The Great Recession of 2008-2009 was a particularly challenging time for those trying to make money, but we got through it, and even most of those who were severely impacted have since recovered. So it’s important to remember that recessions don’t last forever.

Even during a potential recession, there are plenty of ways to make money if you know where to look. It’s widely known that a majority of millionaires are made in a down market, and that is because those individuals commit to finding the opportunities.

making money in a recession

Benefits of Investing When a Recession Hits

In of recession, investing in various markets can be a great way to achieve financial security. Although it can be nerve-wracking to make any investment when the economy takes a downturn, many potential benefits come with investing during a recession.

One of the main advantages is increased buying power due to lower stock prices. During recessions, many companies and industries see their stocks plummet while still having strong balance sheets and fundamentals. This makes it an attractive time to buy discounted shares which may rise in value when the market recovers. Additionally, specific markets, such as the housing market, tend to become more affordable during a recession; this could allow investors to find property at low costs and see significant gains on their initial investment when the economy rebounds.

In addition to buying stocks, investing in specific indices such as the S&P 500 can help investors diversify their portfolios and protect themselves against losses from individual stocks. During a recession, even if specific industries or companies experience losses, the S&P 500 often remains relatively stable. This can provide some security for individuals who do not want to risk their entire portfolio on individual stocks during a difficult period.

Overall, investing during recessions can yield significant benefits for those willing to take a calculated risk. By understanding the markets and making smart investments according to the current economic conditions, investors can benefit from bargains and increased buying power while still protecting themselves through index funds and diversification strategies. With careful financial planning and a sound understanding of the markets, investors can gain significant returns on their investments during recessions.

How to Thrive Financially During Challenging Times

When times are difficult, and there is not enough to go around, getting creative with financial resources is often helpful.

Budget carefully when money is tight. Creating a budget and tracking spending will help ensure that bills get paid, and discretionary spending doesn’t inadvertently eat away at the bank account. Financial tools, such as budgeting apps or software, can help make the process easier and more efficient.

Finally, look for ways to save on expenses by cutting back on unnecessary expenses and larger monthly bills. Economizing on these items will create extra space in your budget for personal essentials and necessary business investments.

By taking a proactive approach to managing finances during difficult times, it is possible not only to survive but thrive financially! Though challenging times can have personal severe implications, doing what it takes now to ensure long-term success can make a world of difference.

Final Thoughts

A recession is a difficult time for businesses and individuals alike. But by understanding the current economic climate, smart budgeting, diversifying your income streams and investing in yourself, you can not only survive these challenging times but even thrive financially. By making smarter financial decisions now and preparing for unexpected expenses or financial impacts later on, you’ll be well-positioned to come out of this recession stronger than ever. Don’t let fear paralyze you—take action today to ensure you have security during tough times!


Is it good to have cash during a recession?

In a recession, having cash on hand is certainly beneficial. It’s essential to have enough money saved up to cover your basic needs, as well as a cushion for unexpected costs that may arise.

Not only will this provide peace of mind and reduce stress, but it will also limit your reliance on high interest credit cards or loans.

It is not always necessary or wise to hoard large amounts of cash during an economic downturn. Storing too much money in a safe place can be a security risk, and large amounts of physical cash may not earn any interest. However, having enough liquid assets to cover immediate expenses is essential for surviving a recession. If you’re just getting started, aim to get one months of expenses in reserves. Then you might continue to strive for 3 to 6 months of reserves that you can put in a conservative interest-bearing account, depending on your cash flow cycle and comfort zone.

Overall, having access to some extra cash during a recession can give you more control over your finances and help you maintain stability while times are tough. It also provides peace of mind knowing that you have the resources to cover unforeseen costs should they arise.

Is Your Money Safe in a Bank During a Recession?

It is natural to be concerned about the safety of your money when a recession hits. But despite worries that banks might not be reliable in times of economic hardship, they are highly regulated and must adhere to specific standards that protect customers’ deposits from loss.

Most people have their money stored in accounts insured by the Federal Deposit Insurance Corporation (FDIC). This means that even if a bank becomes insolvent or fails during a recession, customers can still access their deposits of up to $250,000 per account. The FDIC will then take care of any obligations beyond this amount. Individuals need to understand the insurance limits applied to different types of accounts – various options are available depending on individual needs.

Banks must also comply with liquidity requirements that ensure they always have enough cash or liquid assets to cover customer withdrawals. These regulations are in place to prevent any issues arising from a bank run, where customers try to withdraw all their money simultaneously, depleting the bank’s resources and resulting in a potential collapse. Banks must keep sufficient deposits in reserve at all times for this purpose.

In summary, FDIC-insured banks remain safe places for individuals to store their money during a recession. The FDIC has measures in place to protect customers’ funds, and banks have stringent liquidity requirements so they can handle large withdrawals if necessary. Therefore, customers do not need to panic or take drastic action when economic conditions become uncertain. Individuals need to stay informed and understand the various deposit insurance limits that apply to their accounts. This will help them feel more secure about where to store their money during a recession.

What businesses do well in a recession?

Businesses that can adjust and pivot during a recession often fare the best. Businesses that have been able to create new products or services, streamline processes, reduce overhead costs, and focus on customer service tend to do well in recessions because they can maintain their level of profitability while others may struggle. Additionally, businesses that offer necessary goods or services can remain relatively stable even when the economy falters. Finally, businesses that provide online services can be especially beneficial due to online shopping trends, and the low overhead required to establish a business online.

That being said, if you already own a business in another industry, don’t allow your industry to be an excuse. Even if demand for your product or service has slowed, there is still market share to be gained. Businesses that enhance their quality and service during these times stand head and shoulders above the competition, and can continue to thrive in any market.