Regardless of what happens, it is better to be ready for something that won’t happen than not be ready when something bad does happen.
You would like to think that people have learnt a lot from the economic downturn of 2008 and 2009, but I don’t think that to be the case. People have a very short memory. People are spending more than before, accumulating more debt and generally not caring about the state of their financials. Sure, spending is generally good for reviving an ailing economy and to bring it out of recession, but we are talking about healthy spending and not credit card and borrowed spending!
To be ready for whatever comes, here are some of the ways to weather any upcoming recession or a downturn in the economy.
Tighten your spending: this is the easiest and most obvious one. This is one that you have full control over. Tightening your spending helps in saving you money that you will need in a rainy day. It will also help you get used to a frugal life should things get hard later on. And last, reducing your spending will mean you will only have to spend on things that you need, and avoid maxing your credit card and loans on things you don’t even need nor want-you buy them simply because you think it is cool or have been tricked by promotions and advertising.
Time for a budget: hey, there is that ‘budget‘ word again! Surprise surprise! Well get used to hearing it over and over until you either leave this website for good or finally decide to give up and create one. A budget, whether in good or bad economic times, makes a lot of sense. But when it comes to a downturn in economy or even a recession, it will help you prioritize your spending and purchases. When money is tight, the last thing you want to do is spend it blindly without any accountability. A budget will be your guide through tough times.
Solidify your Job and Networking: So you have a job now and you think your position is very secure and have nothing to worry about? well tell that to all the millions of people who were laid off from their jobs during the recession, many of whom had thought their jobs were very stable. Like a hurricane that sweeps through a town and doesn’t care about what objects it encounters, a recession is the same: no matter how much seniority or experience you have, when a company decides to lay down the axe, you could easily be let go. If anything, companies will try to save as much money as they can during a bad economy which means firing and laying off those that make the most money. Conversely, if you have the least seniority and experience in a company, you could be the easiest and cheapest human asset they could let go without feeling a pinch to the operations of the company. The point is, during a recession, anyone is vulnerable to lose their job.
This requires that you solidify your position at your current job and enhance your networking reach. That is, make your position as recession-proof as possible. Make yourself a very valuable commodity and asset to your company. If what you do is general and doesn’t require a lot of analytical thinking or specialized skills, you may want to learn something that is more specialized and precious to the company’s operations. For example, if you are in an IT Help Desk doing general troubleshooting, you may want to look into that position of troubleshooting ‘servers.
Strengthening your networking reach and circles is also crucial. You don’t want to lose your job before you start networking with people to find a job. You should build and grow your network while you still have a job! Make use of all your current coworker and other contacts you deal with, get their contact information etc.
So while it may seem like there is nothing you can do to weather a recession storm, there actually is like we outlined above. The key is to be ready and not live like there is no tomorrow.