AI disruption, layoffs, economic slowdowns, inflation, rising oil prices…

These are very real threats that most people are forced to deal with. And while you can’t completely ignore these issues, you can structure your finances in a way that limits your downside and helps you sleep well at night.

Here are five tips for creating a financial Plan B in case times get tough.

The Dave Ramsey approach of having no debt and paying for everything with cash is great, but it’s also unrealistic for many professionals and entrepreneurs.

If you have a high-paying career, you probably need to live in a high–cost-of-living location. And as a business owner, you sometimes need to borrow money to scale a project or pay for inventory.

That said, you should avoid high-interest consumer debt (like the kind charged by credit card companies). And if you ever buy stocks on margin, keep the margin ratio low enough that it’s virtually impossible for your loan to be called.

This gives you a cushion if times get tough, and it also provides optionality to borrow money at low—or even zero—interest rates if your cash flow completely dries up.

If you have good credit, many card companies will allow you to borrow via balance transfer at 0% interest for 12 to 15 months. Having little to no debt allows you to take advantage of these offers if you ever find yourself in a serious cash crunch.

Keeping your debt low also protects you from having to sell assets at their absolute low point just to pay bills. If you have the ability to borrow at a low or nonexistent interest rate, you can hold your assets through a bear market.

And if you get back on your feet before the economy fully recovers, you can buy more assets while they’re still trading at a discount.

If I worked in tech and was worried about being replaced by AI, I’d buy a lathe or some CNC equipment and start making hinges and bolts for the U.S. Navy.

Having a parallel source of income not tied to your main profession helps protect against downturns and disruptions, since it’s unlikely that every industry will be affected by a slowdown or economic crash.

Even a parallel business like tutoring—you may laugh, but there are retirees who pay $50+ an hour to take French or Italian lessons, and math tutors in Silicon Valley who clear six figures per year—could be a decent fallback option. These ventures aren’t tied to the regular corporate or consumer economy.

Both Harold Robbins and Winston Churchill, dissatisfied with their salaries, became prolific authors in order to achieve financial freedom and enjoy lavish lifestyles.

If your second income stream is scalable, it may even replace your first.

In times of economic uncertainty, people often hedge by panic-buying gold or ammunition.

A more practical idea is to simply buy essential goods and groceries in bulk each month. Buying in bulk allows you to enjoy a wholesale discount.

It also saves time and money, since you don’t have to run to the store every few days, and provides a sense of security because you have a well-stocked freezer and pantry.

This is an extremely simple uncertainty hedge, but one that often provides immense financial and psychological benefits.

Blue-chip stocks in seemingly irreplaceable industries, like providing electricity or fresh drinking water, are a great way to collect income even during an economic slowdown.

In 2009, for example, Procter & Gamble raised its dividend by 5%. American States Water Company raised its dividend by 8.3% that same year.

Stocks like Coca-Cola, Procter & Gamble, and a number of water utilities can still provide predictable quarterly income during slowdowns and recessions.

If you are intentional about your investing, you can also construct a portfolio that is largely unaffected by international events, or hedge with well-managed oil and commodity stocks that gain value during inflationary periods.

100% returns from a Coca-Cola bottling plant?

87% returns from a Mexican airport operator?

70% returns from a Kimberly-Clark subsidiary?

Those are all personal gains after buying distressed, but profitable, Latin American stocks whenever countries like Mexico or Chile experienced a political or economic crisis. Some of these companies even offered starting dividend yields of 7% or more.

There’s always a crisis, or an opportunity, somewhere.

What’s more, many international stocks are uncorrelated with their U.S. and European counterparts. Case in point: Kimberly-Clark de México is up over 9% year-to-date, while parent company Kimberly-Clark is down more than 2%.

You could also diversify internationally by buying property abroad and using it to collect rental income—or as a bolthole getaway location.

In Paraguay, for example, you can buy a small house for $30,000–$40,000. And coastal homes in Mar del Plata, Argentina (a great city), can go for as little as $60,000.

If you were concerned about nuclear war, or simply wanted somewhere inexpensive to live, buying property abroad could be a smart investment.

A “rational sense of paranoia” means taking proactive measures against potential danger. Stocks do go down, not permanently, but often long enough to wipe out highly leveraged investors.

Likewise, most people eventually face slowdowns in their business or career.

Planning ahead can protect you from these “known unknowns” so that you’re well positioned when real problems arise. Limiting debt and margin usage, developing uncorrelated skillsets, and diversifying geographically can all help protect your downside.

And, to paraphrase Donald Trump’s business strategy from The Art of the Deal: when you limit your downside, the upside tends to take care of itself.

AI promises speed and efficiency, but it’s leaving many leaders feeling more overwhelmed than ever.

The real problem isn’t technology.

It’s the pressure to do more with less — without losing what makes your leadership effective.

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Disclaimer: This article is for entertainment purposes only. It is not financial advice, always do your own research.