Stock Market Crashing? What You Need to Know and How to Prepare

Warren Buffett famously said, “Be fearful when others are greedy and greedy when others are fearful.” But when headlines are blaring about tariffs and your portfolio’s on a rollercoaster, fear is hard to ignore.

That’s why it’s worth remembering the opening line of Rudyard Kipling’s poem “If”, which Warren Buffett has also recommended for nervous investors: “If you can keep your head when all about you are losing theirs…” 

True to that, the best investors — and financially grounded people — aren’t the ones who predict the market perfectly. They’re the ones who don’t lose their cool when things go sideways.

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Is the stock market crashing or just correcting?

First things first — let’s get our terminology straight. Not every bad day in the market is a crash.

A stock market correction is a decline of 10% or more from recent highs. These happen fairly regularly, about once per year on average.

A stock market crash is a sudden, steep decline of 20% or more over a short period, often just days or weeks. True crashes don’t happen often, but when they do, they make headlines.

Thus far in 2025, the stock market has seen significant volatility but not a crash. As of closing on March 13th, major indexes had fallen down by 10% from their recent record highs, and the market has technically entered correction territory—a situation that merits attention but differs from a full-scale crash.

Next stock market crash prediction: can anyone really know?

Let’s be candid — anyone who claims to know exactly when the next market crash is coming is either fooling themselves or trying to fool you. Market crash predictions are like weather forecasts for next year: educated guesses at best.

What we do know is that markets move in cycles. Expansions are followed by contractions. Bulls eventually give way to bears. The real question isn’t if a market crash is coming, but how you’ll respond when it does.

What to do when the stock market crashes

The good news? You don’t need a crystal ball to come out stronger. You just need a plan. Here are smart, actionable things you can control when everything else feels (OK, is) out of your control. Consider the following key tips on what to do when stocks go down.

1. Don’t make any fast investment moves

Selling off stocks during a dip might feel like self-preservation, but it could be the worst time to cash out. Markets are emotional, and panic selling may only lock in losses. Remember: dips are part of the cycle. Historically, the market has always bounced back*. If you’re investing for the long term, zoom out and stick with your plan.

And if you’re new to investing, now is actually a great time to learn the basics.

2. Avoid doom-spending

Retail therapy might feel like a quick win when you’re stressed. ”What does another purchase matter in the long run anyway?” you might fatalistically think. But those temporary dopamine highs can lead to long-term credit card lows. Instead of impulse buying to distract from market anxiety, try using that energy to clean up your budget or set a savings goal.

💡Pro tip: Download MoneyLion for free to  track your spending in real time — and you can even round up your spare change to invest or buy Bitcoin with Round Ups.

3. Revisit your financial health checklist

A rocky market is the perfect reminder to do a quick financial self-check. Ask yourself:

• Do I have an emergency fund?
  
• Am I contributing to my 401(k) or IRA regularly?
  
• Am I paying off high-interest debt?

Getting your foundation in place helps make you less vulnerable to market swings and gives you a greater sense of control.

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4. Zoom out on your goals

It’s easy to feel like every bad market day is a personal failure. But if your financial goals are long-term — like retiring early or buying a home in 5 years — just take a deep breath and remind yourself of your larger goals.

5. Diversify if you haven’t already

Putting all your money in one stock or asset type is like putting all your eggs in one (very fragile) basket. Volatile markets are a wake-up call to make sure your investments are spread out across different industries, asset types, even countries.

Think of it as building a portfolio that can help weather all kinds of storms.

6. Stay informed — but don’t obsess

You don’t need to refresh your investing app every 30 seconds. In fact, that can make things worse. Set a routine for checking in (weekly, biweekly, whatever works for you) and stick to reputable sources. Less panic, more perspective.

7. Keep putting money away (yes, even now)

The idea of investing or saving money during a downturn might sound strange, but it’s actually one of the best things you can do. It’s called dollar-cost averaging: when you invest a fixed amount regularly and automatically, you’re  removingtaking out the emotional aspect by “setting it and forgetting it” and not trying to time the market. Retirement accounts often use this strategy, to help weather ups and downs over long periods of time.

And it’s not just investing. Keeping up with your savings plan, even in small amounts, can help you stay on track long-term.

Potential places to store your cash during a market downturn

When the market’s throwing a temper tantrum, having some of your money in calmer waters can help you sleep at night.

High-yield savings accounts: Offer better interest rates than traditional savings while keeping your money accessible for emergencies or opportunities. Learn more here. 

Certificates of Deposit (CDs): Provide fixed interest rates for a specific time period, typically offering higher yields in exchange for locking up your money.

Money market funds: Invest in short-term, high-quality securities that aim to maintain a stable value while providing modest returns.

Preparing for the next stock market downturn

Instead of obsessing over the next market crash coming, focus on preparing your finances to weather any storm:

Build that emergency fund: Your first line of defense against forced selling

Diversify across asset classes: Not just different stocks, but different types of investments

Pay down high-interest debt: Market returns are never guaranteed, but debt interest is

Keep some powder dry: Having cash available lets you capitalize on opportunities

Invest regularly: Automatic investments can help remove emotion from the equation

Market Crash Coming? Keeping Perspective

We can’t control the news cycle, the Fed, or the latest round of tariffs. But we can control how we respond. Panicking rarely pays, but consistency, calm, and smart money habits do.

So take a deep breath, review your checklist, and remember: the market may be messy, but you’ve got this.

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