How to make money during a recession: 9 ways to earn

Recessions come and go and can wreak havoc on your finances. This can leave people wondering if they can maintain their financial situation throughout the economic downturn. Fortunately, you can even make money during a recession. But how?

To help you out, we’ve listed nine tips on how to make money during a recession, starting with solidifying your existing income. Let’s dig in.

9 tips on how to make money during a recession

While a recession can be a scary time for everyone involved, it’s not the time to toss your hands in the air and give up. Instead, dig deep and use these tips to help you make money during an economic downturn.

1. Protect your existing income

The first and most important step to making money in a recession is protecting your current income. Look critically at your job and employer. While no job or company is truly recession-proof, you want to be in a role or company that’s as recession-resistant as possible.

If you have doubts about the company you’re with — maybe it’s a startup with an uncertain future or a larger company that has already gone through rounds of layoffs — start applying to companies that seem more secure.

Maybe your role isn’t overly important and you fear it could be cut to save on expenses. In this case, you may want to look for related roles that are more secure, then train for and apply to those roles to help secure your income during the recession.

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This is no guarantee you won’t lose your income in a market downturn, but it helps lower your risk.

2. Pick up side gigs

Side hustles are great ways to boost your income during a financial crisis without impacting your main job. These on-demand jobs allow you to earn money on your schedule. This source of income can include a wide range of activities, such as buying and reselling items on eBay or Amazon, freelance writing, performing on-demand tasks, grocery shopping, delivering food, ride sharing, and more.

You can also do something outside the box, like start a podcast and gain sponsors, or launch a blog and earn income from affiliate posts and advertising.

3. Trim your expenses

That old adage “you’ve got to spend money to make money” isn’t always true. This is especially the case when there’s a recession. 

During a market downturn, you can cut back on your living expenses to the minimum to be prepared. And if you manage to dodge any financial turmoil, you can use your newly trimmed budget to your advantage by investing your new-found cash surplus.

So, review your monthly budget and find places to trim for the short term without making huge sacrifices. Things like that streaming subscription you rarely use, the daily stops at the coffee shop, or dining out for lunch multiple times a week might be areas where you can trim temporarily.

4. Save that surplus

Once you’ve trimmed your budget by eliminating some of the less-important expenses, take that surplus and place a portion of it in a savings account. Ideally, you’ll save roughly 20% of your take-home income. However, if your surplus is less than that, it’s OK. You can slowly work your way to that 20% mark.

Many personal finance experts and financial advisors recommend building a three- to six-month emergency fund. So, continue putting savings there until you have three to six months of expenses in your savings account. This will allow you to get by if the financial downturn impacts your job and income.

Also, if you place these savings in a high-yield savings account, you can earn compound interest — interest paid on previous interest earned.

5. Invest some surplus

Once you’ve built your emergency savings, it’s time to make your surplus money work for you by investing it. Investing during a recession may sound intimidating, but you don’t need to be a seasoned stock market professional to get into it. 

You can jump in with relatively simple investments, such as exchange-traded funds (ETFs). Similar to mutual funds, ETFs pool several related individual stocks or bonds into one investment. This allows you to easily choose investments you like and automatically builds in diversification, because each ETF includes more than one investment.

So, what types of ETFs are high-quality investments during the market volatility of a recession? According to Morningstar, some recession-friendly areas to consider include consumer staples that people pay for regardless of economic conditions, utilities, and healthcare. These are called defensive stocks, and they perform well because they are not luxuries — people need them whether there’s a recession or not.

You can also invest in retirement accounts, such as 401(k)s through an employer and individual retirement accounts (IRAs), which you can open yourself. You may have the option to choose your own investment strategy or to have an advisory create a diversified portfolio for you.

If you want some guaranteed passive income, you can also invest in CDs: certificates of deposit. You’ll earn a fixed interest rate on your deposit if you leave your cash in the account for a certain time frame. Alternatively, you can place the cash in no-risk bonds, such as I-bonds, and earn interest.

6. Get into real estate

A recession doesn’t always mean lower prices in real estate, though it does happen sometimes. However, a recession almost always impacts one related factor: interest rates. When the Federal Reserve (the Fed) lowers interest rates to help spur spending during a recession, this is a great time to invest in the housing market. You may not get a huge discount on the asking price, but a low interest rate from home loan lenders can make the monthly payment far more affordable.

With that more affordable monthly payment, you can then convert this investment into a rental property and earn relatively passive income month in and month out. If you want to go completely hands-off, you can also hire a property manager and pay them a cut of the rent.

If you want to get into real estate but don’t want to own property yourself, you can also invest in real estate investment trusts (REITs). REITs own income-producing commercial real estate and use investments to help develop and support its operations. You invest in the REIT and reap the benefits if the property is successful.

7. Sell unused things

We often have tons of items sitting around the house that we don’t use. Generally, we keep these items stored away “just in case” we ever need them for anything. Typically, they remain out of sight and out of mind, so it’s no big deal. However, during a recession, when money may get tight, their value goes to waste.

Instead of letting these items remain idle in a closet somewhere, you can sell them for extra cash. You can sell them through a range of marketplaces, including eBay, Amazon, Facebook Marketplace, Craigslist, Etsy, or many more reseller sites, and reclaim some free closet space and extra cash.

8. Start your own business

When things get rough economically, you can buck the trend by taking control of your own financial future and starting your own business. You can choose from a wide range of businesses that require only a small amount of upfront cash to launch.

One idea is to buy a lawn mower, a trimmer, and a few other relatively inexpensive lawn care supplies and start a lawn-mowing and landscaping business. You could also purchase the tools and supplies needed to detail cars and launch a mobile detailing business. Or maybe cleaning houses is more your thing. You can start this business by investing in basic cleaning supplies. 

9. Lend out your things

Look around your house and find items you don’t use too often but know other people would love to borrow. This can range from small things like camping equipment or lawn care items to larger things like a box trailer or your extra car. Instead of letting these items sit idle or selling them for cash, you can list them for loan online and earn a steady passive income stream from them.

You can simply list these items on places like Facebook Marketplace or Craigslist for rent or list them on niche rental sites like FriendWithA. If you’re looking to lend your car to people, you can use sites like Turo.

You can make money in a recession with the right attitude and approach

When a recession hits, things can get a little scary. Despite the uncertainty, you can still earn plenty of money during an economic downturn. As mentioned above, this all starts with you securing your current financial situation then working on earning more money, which is all included in the nine tips on how to make money during a recession above.

You can help your kids save, budget, and prepare for the future with the Greenlight app. Our app includes an easy-to-use debit card and can even help them learn about personal finances and investing. Download the Greenlight app today.