I'm 26, earn $90K a year and save $7K annually for my 401(k). I spend $2.5K a month on expenses but tariffs have me worried about a recession — how can I prepare for a financial downturn?

There’s also fear that tariffs could fuel a recession. If tariffs cost American businesses money, these businesses may be forced to cut corners, which could lead to an uptick in layoffs and unemployment. From there, we could see a decline in consumer spending, leading to a broad economic downturn.

A recent Ipsos poll found that 61% of Americans think the country is headed into a recession in the next year, while only 24% think the recent economic news on Trump’s tariffs is positive. For those in the former group, America’s burgeoning global trade war likely has them at unease.

Let’s say, for example, that you’re 26 years old earning $90,000 a year and you typically save $7,000 annually in your 401(k). You spend around $2,500 a month on essentials and you generally have little trouble making ends meet — after all, you’re managing to save almost 8% of your salary at such a young age. But that doesn’t exactly mean you’re not worried about the impact of a potential recession.

The good news is that since you’re not spending all of your monthly income on bills, you should have some wiggle room in your budget to get yourself prepared for a recession. Here are some steps you can take to gear up for a financial downturn.

Boost your emergency fund

Unfortunately, recessions have the potential to lead to higher levels of unemployment. You may have a good job now, but if a recession hits, that could change. And since you’re 26 and earning $90K, the danger lies in potentially struggling to find a new job that gives you that same income (unless you happen to be in a lucrative field where $90K salaries aren’t unusual).

That’s why it’s important to boost your emergency fund — and if you don’t have one, it’s time to get one started. Saving money in an emergency fund can not only help to get you through a period of unemployment — allowing you to cover your bills without taking on debt — it can also help to keep you relatively stress free as you search for a new job.

At 26, you may not have the most experience, so it’s important to have a financial cushion in case you end up needing time to learn certain skills in order to get hired again.

Financial experts typically recommend saving enough in an emergency fund to cover three-to-six months' worth of expenses, but if you can, you may want to aim for the higher end of that range. If you don’t yet have three months' worth of expenses saved, you may want to cut back on 401(k) contributions until you have established more of a near-term safety net.

Avoid taking on new expenses

If you’re 26 and steadily saving $7K a year, that’s an indication that you have a pretty good handle on your spending. But you should be aware that now may not be a great time to take on any new expenses.

If you happen to lose your job in the near future, the last thing you’d need is to be committed to bills that are higher than the $2,500 a month you’re already on the hook for. To this end, you may want to hold off on upgrading your car, or moving into that larger apartment that just became available in your building, which will raise your rent costs by $200.

If anything, now’s the time to scale back on expenses so you can boost your savings and give yourself more of an emergency cushion.

Boost your income

You don’t necessarily have to worry about a recession wreaking havoc on your 401(k). First of all, recessions don’t always go hand-in-hand with stock market downturns. And secondly, since you’re 26, you have plenty of time for your retirement savings to recover from a hit.

But what you should do is try to boost your income so that if you wind up losing your job, you’ll have a backup stream of income to fall back on. To this end, it pays to explore your options for getting a side hustle.