SURVIVING THE RECESSION
SURVIVING THE RECESSION
On Wednesday it was announced that the UK was in recession for the first time in 11 years
A recession is a period of temporary economic decline when there is a widespread drop in spending, generally identified by a fall in GDP in two successive quarters.
Economic recessions are nothing new. Throughout history there have been many instances of economic recession.
After each recession came a period of economic growth that enabled companies to get back on their feet and the economy to start flowing again as individuals and families had more money to spend.
So, do not despair, the recession is not going to last forever! Sooner or later the economy is going to start getting back to normal.
What’s more important is how you cope during the recession as this will determine the effect it’s going to have on you.
WEATHERING THE STORM
So, how do you prepare yourself to weather the storm?
Build your emergency fund
The size of your emergency fund will vary depending on your personal circumstances however the general rule of thumb is to put away at least three to six months’ worth of expenses (even more to prepare for a recession).
Having an emergency saving fund is a vital step in providing you and your family with financial security when you need it the most.
Recession Proofing Your Job
Making yourself an indispensable as employees who aren’t deemed to be essential to the company’s daily operations are the first to go when a company starts making job cuts. For instance, if you can, involve yourself in several company projects. The more pies you have your fingers in, the more hesitant management will be to let you go.
Attitude counts. When trying to decide who will stay and who will go, often attitude and the employee’s ability to boost morale is as strong a determining factor as their ability to do their job. No matter how hard things might be try to be the employee that keeps morale high not the one that drags it down.
PREPARE, JUST IN CASE YOU LOSE YOUR JOB
Network
Keep in touch with your employers and colleagues, both past and present (LinkedIn is great for this). Having a network of friends and potential employers, means you be one of the first to know who’s hiring and you may even have insider knowledge.
Keep Your Skills Up to Date
Regardless of the industry you are in, sweeping changes in supply, demand and technology are going to require you to stay up to date with what’s happening in the field. Businesses will prioritise high quality employees that are able to help the company keep pushing forward in changing times.
Work on Your Plan B.
Consider a few what-if scenarios. What if you or your partner are laid off, you lose a massive client and so on. While there are less emotions involved, think about how you'd handle each scenario and plan for them accordingly.
Keep Your Eye on the Jobs Market
Keep an eye on what’s available in the job market and with whom. If you do find yourself in an unfortunate situation you will already know about any potential vacancies up for grabs.
IF YOU GET LAID OFF
Sadly, some people are going to find themselves in this position during the recession. However, remember “when one door closes, another opens; but we often look so long and so regretfully upon the closed door that we do not see the one which has opened for us.” Alexander Graham Bell
If you find yourself in this unfortunate situation follow the ‘just in case advice above’ and the following points below.
Update your vitals.
Having your CV and #LinkedIn profile ready to go can help you move forward quickly with a job search, at a time when you may just want to wallow in your sorrows.
Diversify Your Income
“Don’t put all your eggs in one basket”. Having multiple streams of income can really help if one income source starts to dwindle – or even worse gets completely eliminated.
Diversifying your income can include renting out a room, renting out space in your garage, your garden or even your car. You could get a weekend job or look for ways to cash in on your current skills (e.g. by writing blogs or selling on Etsy).
Downsize to a More Frugal Lifestyle
Downsizing and living frugally is a great strategy to help you do more with less. This doesn’t mean depriving yourself of things that bring you joy. Instead, it about being very intentional with your spending by spending money on the things that matter and cutting back in other areas. Making spending conscious choices reduces expenses, with minimal impact on your lifestyle.
There are lots of ways you can start living frugally. If your household has two cars, consider reducing it to one and making use of public transport. Cut down on eating out by meal prepping and reduce your shopping bill by shopping around, buying in bulk and using coupons.
THE BOTTOM LINE
In order to survive an economic recession, you have to think in the long term. Remember, it’s not going to last forever but you will have to leave behind the expectation of instant gratification for the time being. Make the most of what you have and prepare for a brighter future.