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Is Fed tightening of interest rates over? Has the bond market gone bust? At first glance, it would seem that rising interest rates and lower yields are driving the economy into a recession. However, a recession isn’t an inevitable event when yields flatten and rates go up, it’s just an indication of changing market conditions.

To protect and build your assets, no matter what market conditions exist, you have to be realistic and disciplined. First and foremost, assess your income and your spending. Are you saving at least 10% of what you earn? If you own a home, are you paying toward the principal balance each month, even if you have an interest-only loan? Do you have unsecured debt, such as multiple credit cards? Do you make more than the minimum payment on them each month?

It doesn’t matter what your income is. I have clients that have six-figure incomes who live paycheck to paycheck and I have clients that make as little as $25,000 a year who have enough liquid assets to live comfortably for a year or more, if they lost their jobs. The difference? Preparation and planning!

An investment advisor I know once told me that the right investment is just like the right mortgage, it is dependent on numerous varibles that are highly individualized. Think about it— a lottery ticket is a great investment if you have the winning number—the odds of having the winning number, however, are not very high. If your preparation and planning efforts are like those of playing the lottery—one small effort with expectations of one big payoff—your finances are probably not well-protected against either a recession or unexpected income loss, such as a disability or lack of employement.

Tax season is a great time to think about recession-proofing your finances because it’s the time of year that most everyone is reviewing and evaluating their overall financial picture. Did you invest this past year for retirement? Did you put money into a liquid asset fund to be available if you find yourself suddenly without a job? Are you paying down the principal on your mortgage to build equity instead of counting on appreciation to create equity?

Find yourself a professional financial planner that can assist you in creating a realistic savings plan. With his/her help, choose low-risk investment opportunities that provide solid returns year in and year out, despite changing market conditions. Pay down the principal balance on your mortgage. Pay off unsecured credit cards and use them sparingly or only in emergencies in the future.

Plan and save now for the life you want in the future! It’ll be here sooner than you think!