LATELY WE HAVE HEARD THE BIG “R” WORD BEING THROWN AROUND … RECESSION.
WILL A RECESSION IMPACT YOU? IF YOU ARE WORRIED, THE BEST DEFENCE IS ALWAYS OFFENCE.
How do you reduce the possible affects of a recession?
PLAN AND BE PREPARED
First, know your numbers. If you don’t know your numbers, you cannot create or maintain a financial strategy. If you are not proficient at Excel, lined paper will do. Income minus expenses is the magic number to know. When it is a negative number, take action now to bring it into positive territory. If it is positive, start putting away as much as you can into savings.
You likely think cutting expenses means pain and hardship, but you are wrong. In my book, Lessons from the Depression, Eliminating Debt the Old-fashioned Way, I devote an entire chapter to having fun for free. The public library is a great place to get free entertainment including weekly programs, books, movies, and magazines. Instead of going out for dinner with friends, have a potluck. Bring your coffee instead of stopping along the way to work. If you look at your monthly expenses you will find dozens of ways to save money.
KNOW YOUR INDUSTRY
Secondly, know your industry. Is your industry highly affected by a slow down in the economy?
If you are worried about your current position, take the time now to update your skills in any way that is valuable to your current job and/or in the general marketplace. Update your resume and look for other employment opportunities if you think your job may be in jeopardy. Start building a network on LinkedIn as relationships are often the gateway to job opportunities. Being proactive and prepared is the best protection against a recession.
And last, but not least, know your options. Look into your rental agreement or mortgage, employee contract, and insurance policies to know if you were to lose your job what the terms are.
For instance, if you have a balance on your credit card can you buy insurance that will cover your minimum payment for the duration of your unemployment? Does it make sense for you to start making those payments now to protect yourself for the possibility?
It’s important to know your options, then you can start making decisions that will benefit you in the event you are laid off.
Often we find, those options disappear at the point of unemployment and you are then powerless to protect yourself.
OTHER FACTORS TO BE CONSIDERED
Following all three of these steps are prudent things to put into place regardless of what the economy is doing. A recession is not the only threat to employment. Illness, death of a loved one, or a company-specific problem can all impact your job security.
The more you do today when times are good, the better you will fare during any times of trouble.
Looking to take a deeper dive in? Darlene’s best selling book Lessons from the Depression, Eliminating Debt the Old-fashioned Way can be purchased on-line