Here are 8 ways to bulletproof your finances ahead of a likely recession in 2023

The alarm bells are sounding on the US economy and recent modeling by Bloomberg economists found a 100% likelihood of a recession next year.

That means it's probably time to take action to protect your finances.

Insider spoke to five personal finance experts to uncover the key steps to help you bulletproof your finances ahead of a rocky 2023.

The experts advised building up an emergency fund to cover your expenses if you lose your job. Such a fund would ideally cover three to six months' worth of expenses, they said.

The average American household spent nearly $67,000 on expenses — things like housing, food, and transportation costs — in 2021, according to the Bureau of Labor Statistics. So, for the average household, the emergency fund would need to be between $16,750 and $33,500.

Jeremy Schneider, founder of the Personal Finance Club, a website which sells financial education courses on budgeting and investing, said if you don't have three to six months' worth of expenses saved up, you're going to need to spend less and save more to get there.

Getting a budgeting app might be the best way to do that, according to Steve Chen, founder of Call to Leap, an educational investing site. These can help you better visualize and prioritize your expenses.

Thinking hard about everyday expenses can help you find savings. Such an exercise often requires the least effort and bears the most fruit, said Cameron Huddleston, an author and director of Carefull, a security service for elderly people's finances.

Bundling your car insurance and home insurance together, finding a cheaper cellphone or internet plan, reducing the number of streaming subscriptions you have, and making your own coffee and lunch rather than buying them every day can prove to be easy wins for cutting regular spending.

Paying off your highest-interest credit cards in a time of rising rates can be the most effective way of paying down debt before it's too late, Chen said.

Cutting costs like streaming subscriptions can lead to small and worthwhile savings, but expenses such as these nonetheless pale in comparison with the core drains on your finances.

The cost of running a car is usually higher than it needs to be, Schneider said, and can be a key source of indebtedness for many. If there are two vehicles in your household, now might be the time to consider getting rid of one and joining a car-sharing club, buying a bicycle or scooter, taking public transport, or walking, Chen suggested.

Emilie Bellet, founder of educational finance site Vestpod and host of the Wallet Podcast, tells people to scrutinize their spending habits: "When we recognize what specific emotions drive our impulsive spending, we can then be more mindful about our decisions."

Still, housing is the biggest expense for most people and can seriously move the dial on your financial resilience, the experts said.

Huddleston advised homeowners to think about renting out spare rooms, or opening them up to AirBnB.

Schneider said: "Your problem is your $650 payment on your truck that's sitting outside. Your problem is your $2,000 rent. So the options are things like getting a roommate, or downgrading your car."

Income can also be found from unwanted possessions around the home. "Looking around your house and saying 'what can I sell for money?' is another way of getting some cash for little work," Huddleston said.

Ahead of a likely downturn, it could be worth taking advantage of a strong labor market that still has plenty of jobs.

If you have the time, finding additional employment is the quickest way to bring in extra income, the experts said. For example, Schneider said, a bar shift that pays $100 could garner an extra $800 of income per month if you're able to do two a week.

Dog-walking, babysitting, answering paid online surveys, and gardening can also help bring in extra cash in times of need, the experts said.

In an age of "over-employment," remote working, and quiet-quitting, Chen said people are increasingly able to find the time to take on additional jobs and side-hustles from home.

Passive income streams are the holy grail for financial independence — but it takes a fair amount of groundwork to put them in place.

"Drop-shipping" — acting as an intermediary between a supplier and customers – affiliate marketing, and earning advertising income from websites are some ways you can build passive income streams. Some people have bought vending machines and rented property.

Olamide Majekodunmi, founder of All Things Money, a financial education blog for millennials, said it's important not to sink too many up-front costs into passive income streams in the hope they'll bear fruit.

And Chen said it still takes lots of work to get to a point where you can enjoy passive income. He makes money uploading old videos to social media.

The negative effects of a recession, like falling income and higher unemployment, may not become evident until some months into the downturn. That leaves plenty of time to build up a new monetizable skill, Schneider said.

Learning search engine optimization, content-writing, and user experience design, for example, are skills that are in demand from companies and offer lots of freelance opportunities, Huddleston and Schneider both said.

"There's so many free online courses now that allow you to bolster those skills," Majekodunmi said.

Once your finances are on a better footing, you should begin automatically transferring additional income into a savings account you can't easily access, to stop the temptation to spend, Huddleston said.

"Have that amount, the total amount that you're saving from all these ways that you're going to trim your expenses in half, that automatically transfers to a savings account," he advised.

The worst thing you can do with a downturn on the horizon is act rashly, the experts told Insider. Now is the time to ensure your finance fundamentals are on the right track — and not necessarily to pull money out of investments.

"If you're already an investor, it's important not to panic and keep your mind focused on long-term goals," Bellet said. "Continue investing. Remember, investing regularly over a long period of time works."

Don't try to pack in all these suggestions at once, for risk of getting overwhelmed, Chen said. "Start by downloading a budgeting app this week, then in two weeks, pay off a credit card. The rest will follow."

Schneider said households must try to keep expenses below income, and to boost savings regardless of how the wider economy is faring.

"A habit of what wealthy people do is they don't think about this week," he said. "They think about six months, or a year, or five years from now."