(ABC4) – With the economy’s current state, many are left wondering whether a recession is on the horizon. The definition of a recession is when there are two straight quarters of gross domestic product (GDP) loss. The current value of GDP in the U.S. has already declined for the first quarter of the year.

Inflation continues to remain at a 40-year high. While a recession seems near in the future, there have been some positive outcomes of America’s economy at the moment. Unemployment rate remains low at 3.6%. The average hourly wage has increased over the last year by 5.6%. Consumer spending is still strong and mortgage interest rates remain low.

The possibility of a recession remains however, so Americans should be prepared. One of the biggest ways people can prepare is by having a detailed financial plan in place. Michael Stevens from Capital Wealth Advisors offers tips to remain financially prepared including:

Diversify your investments

Having your assets and money in different varieties such as bonds, stocks, cash, or property. This can help lessen the chance of losing everything at once if a recession were to hit.

Remember not to put all your money into high-risk investments.

Eliminate high-interest debt

Tackling your highest-interest debt first ensures that you’ll be paying less in the long run. It’s also a good idea to set up auto-payments on your bills or other loans to avoid any late fees that could add up quickly.

Boost emergency savings

It’s critical to set aside an emergency fund with enough money to cover 3-6 months of expenses in the event you lose your job.

Recessions often bring job loss and pay cuts across the board, so it’s important to be financially prepared.

Overall, 81% of adults today believe we are heading towards a recession. You can protect yourself and your family by staying prepared financially and planning early with a financial advisor.