While we may not officially be in a recession, most economists agree that one is looming on the horizon, if they don’t feel that one has already begun. A recession is a downturn in the economy where businesses lose money, and companies produce fewer products for six months (two quarters) in a row.
For most everyday people this means that the unemployment rate increases, wages will stagnate, and the stock market will lose value. Unfortunately, right now, we have all of the indicators of a recession coinciding with historical inflation. So what can you do to prepare for and survive a recession?
One of the first things that you can do to survive a recession is to trim some of your spending habits. Do you have subscriptions to multiple streaming services that you aren’t using? A gym membership you only use a few times a year, or maybe you go out for dinner or lunch several times a week? These are places where you can make changes to save money, without really impacting your daily life.
Pay Down Debt
If it is at all possible work to pay down your debts, especially any credit card debt that you might have. Having less debt means that you have more money for everyday expenses and any emergencies that might arise.
Boost Your Emergency Savings
When you find an extra dollar here and there from trimming down your expenses, try to put it in your emergency fund to help it grow. Ideally, you should have 3-6 months’ worth of household expenses in savings, but it can be tough to get there, especially when the costs of goods and services continue to rise.
Prepare Your Resume
Unfortunately, one of the hallmarks of a recession is an increase in unemployment, which means layoffs are possible. If you haven’t updated your resume in a while, now is a good time to do so. You may not need it, and hopefully, you won’t, but getting it prepared now is easier than after the shock of a layoff. You should also consider updating your LinkedIn profile with a recent picture, and adding any new certifications, job responsibilities, or position changes.
Look for Opportunities to Make Extra Money
During a recession looking for opportunities to make extra money is always a good idea. You can do this by selling items that you don’t need like clothes, furniture, sporting goods, or exercise equipment that you no longer use. A recession is a great time to try to sell these items because many people will be looking to save money by purchasing items second-hand instead of brand new ones.
Stock Up On Essentials
In addition to paying down debt, and building up your emergency fund, you will also want to deepen your pantry. This means building a few months’ worth of pantry and household essentials like toilet paper, toiletries, etc.
A well-stocked pantry should include a variety of canned proteins, canned vegetables, rice, pasta, flour, sugar, spices, oils, yeast, and any other shelf-stable items your family eats regularly. Knowing that you have a well-stocked pantry can relieve some of the “what will we eat” worry if you suddenly find yourself with less income.
Things to Avoid During a Recession
Taking on Additional Debt
If there is any way to avoid it you don’t want to take on any additional debt during a recession. This is not the time to buy a new car (unless you are paying cash), take out a new credit card, cosign on a loan, or make any kind of purchase where you make monthly payments (like rental furniture) if you can get by without doing so.
Taking Your Job for Granted
Not every job can be your dream job, but simply having a job during a recession is a blessing that someone else is wishing for. That’s not to say that you can’t look for better opportunities, but it would be unwise to quit a job without having another one lined up and ready to go during a period of economic uncertainty.
Neglecting Your Health
Make sure that you don’t neglect your health during a recession. Keep up with your routine check-ups for physicals, dental, and eye exams. It is important to keep up with these visits for your health while you have a job and insurance, even if it’s not great insurance. If you are one of those unfortunate people who lose their job and insurance at least you will know that your health needs are up to date.
A recession is not the end of the world, and eventually, the economy will rebound just like it always does. These tips can help you and your family to come through it on the other side just fine. Do you have any other tips to share on how to survive a recession?