How to Survive a Recession: 5 Things You Should Do

In a previous blog post, I discussed the five things you should not do in a recession. As I mentioned in that post, we are not officially in a recession, but we may be heading towards one. So today, let’s talk about what steps you can take to be ready if that happens.

1. Evaluate

The very first step you need to take in a recession is to evaluate your financial situation. We all know that our physical health is important, but your financial health matters too. When your finances are not in order, it creates stress and compounds the issues you experience during a recession. Knowing where you are spending your money will facilitate effective planning. These insights will enable you to make strategic changes that will help cushion the blow of a recession. Look at your income. Do you have any other income streams? Calculate your total take-home pay. Then calculate and subtract your expenses. How much, if any, do you have remaining?

Take particular note of how you are spending your money. For instance, what percentage of your salary are you spending on necessities versus wants? Necessities are things that you must have to survive, such as food and housing. Wants are things you do not need but desire to make you more comfortable such as designer clothing. Are you currently living below, within, or above your means? If your expenses are more than your net income, then you are living above your means. Evaluate and be willing to make any adjustments necessary. Be assured that some changes will only be temporary.

2. Reduce Expenses

After you have evaluated your finances, it is now time to determine where you can cut expenses. The goal here is to free up cash by eliminating or reducing non-essential spending. However, don’t view this as a negative thing. It is highly possible to cut back while maintaining a comfortable lifestyle. Some areas to consider are entertainment and clothing. For instance, you can replace cable television with cheaper alternatives such as Amazon Fire, Netflix, or other streaming services. You can hold off on new clothing purchases and instead mix and match your outfits based on what’s already in your closet. More severe cost-cutting measures include cutting back on housing. For instance, you can downsize to a smaller house, relocate to a cheaper neighborhood, or refinance your mortgage. Since each family is different, evaluate what changes you can make to cut back.  

3. Diversify Your Skills

In a recession, your job is no longer secure. The best way to safeguard yourself against unemployment is to increase your skill set. However, you don’t have to pursue a four-year degree. Seek cost-effective ways of learning new things. For instance, does your company offer free skills-training? Take advantage of them. There are also online training platforms that offer low-cost skills training. One that I have used is Udemy (udemy.com). Depending on your field, you can even learn some soft-skills on YouTube for free such as advanced excel, video-editing, and web design. Be proactive and take charge of increasing your proficiencies. Don’t wait until you are looking for a new job or want a promotion to increase your knowledge. Show your boss how valuable you are now. However, if you do get laid off, the additional skills you gained will facilitate landing a new position.

4. Work on Plan B

In tandem with diversifying your skills, start working on Plan B. Even if you believe your job is secure, prepare the next steps in case you do lose your job. It is always beneficial to think ahead. Planning helps you to be ready for disappointment, but it also mitigates feelings of hopelessness. Why? Because taking action places control of your circumstances back into your hands. Begin by creating or updating your curriculum vitae. Now is a great time to strengthen that resume and add the skills you recently gained.

Next, begin networking. Many companies are using employee referrals to hire candidates. According to this article, Dr. John Sullivan’s research revealed that 88% of employers felt that referrals were their #1 source of above-average applicants. Maintain contact and relationships with friends from organizations in which you are interested. When the time comes, they might be willing to refer you to a position.

5. Weather the Storm

After you have planned, made changes, and prepared yourself for the possibilities, it’s time to relax. Yes, relax. We all tend to focus on the problems. However, spending time thinking about the negatives does nothing to make things better. All it does is prevent us from enjoying the little good things we do have. So, I encourage you to stay calm, stay blessed, and let the storm pass.

Final Thoughts

Sometimes recessions force us to make strategic changes in our lives. Some of these decisions are difficult to make because it means cutting back on things we want. However, remember your goal is to safeguard yourself and protect your future. The decisions you make today will impact your tomorrow.

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