Millennial Money: Recession jitters and your finances

Even just talk of a possible recession can trigger anxiety for anyone who associates it with the major economic downturn of a dozen years ago. But history doesn't always repeat itself.

"The financial crisis in 2008 was basically the second-worst recession ever after the Great Depression in the last 100 years; it doesn't always have to be like that," said Luke Delorme, director of financial planning at American Investment Services. "There are relatively mild recessions that aren't so impactful."

Recessions — and their severity — are out of your control, but as Delorme and others point out, your own financial situation doesn't have to be. You can take steps to insulate yourself from an economic downturn. And if circumstances align in your favor, you may even thrive.

Get prepared: It's impossible to know for sure whether a recession is on the horizon, Delorme notes. The good news is that one may now be further off than it had appeared just months ago. If so, it means more time to prepare.

Tanja Hester and her husband, Mark Bunge, were among the lucky ones during the financial crisis. In 2008, the California residents were political consultants, and their jobs remained intact. Still, they readied for the worst, making sure they would be well-equipped to tackle their goals.

"It felt like a time to batten down the hatches and get things in order, so we were definitely ramping up our savings at that point," Hester said.

As a result of planning, they were able to pay down debt, build up an emergency fund and even buy a condo, despite the economic turmoil around them.

Tackle credit and debt: One key is to build or maintain good credit. Creditors may tighten lending during a recession, but a good credit score (690 or higher) can open doors to lower rates.

If you have no credit or bad credit (629 and below), consider a secured credit card that reports to all three major credit bureaus. Such cards require an upfront security deposit that's refunded upon closing or upgrading the account.

Debt, budgeting and savings are all big factors that Delorme cites, as well. Tackle them now when times are relatively good.

Make a budget: When it comes to expenses, consider this budgeting approach: Allocate 50% of your after-tax income for essentials like rent and groceries, 30% for wants, and 20% for debt and savings. If you need help with such tracking, your monthly credit card statement can be a tool.

Also, try thinking of your money in terms of buckets and assign each bucket a purpose. Creating separate ones for an emergency fund, retirement savings and a travel fund can help you earmark amounts for each goal.

And don't forget 401(k) or IRA contributions. Saving 10% to 15% of pretax income is ideal, but start where you can and contribute enough to grab any employer match.