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Getting Ready for and Preparing for the Next Economic Recession- A Holistic Approach
I wrote a while back about how the Great Recession of 2008 impacted me, and I wanted to follow up with a post on what to do to prepare. Statistically, we are way overdue for a recession and to define what a recession is- recessions are defined as two quarters of economic decline in our GDP. Recession's are marked by stock market declines, layoffs and general declines in the standard of living. If you want to look at the stock market as an indicator, we haven't had a true bear market crash as we did in 2008 in 14-years so we are way overdue. Typically crashes occur once every decade on average and what follows is a reduction in employment opportunities. We've got to prepare collectively and we've got to get ourselves ready but how do we do that? We do it holistically through financial preparation, preparation in our careers and in our mental and physical health.
As I wrote before, in 2008 the biggest shocker was income loss. People who had steady jobs for years and sometimes even decades lost their jobs, their income and stood to lose their houses and quality of life within just a few months. I was one of them, and learned some painful lessons. During the recession I was a temp worker at an aerospace company, and one day we were called in and told all temps would be let go. They just didn't have the money in the budget to keep us and the recession made an impact on me at that moment. I literally had a month to get my stuff together and get a new job. In one month my predictable paycheck I depended on would be gone. Thankfully, I had a good experience there and had impr seed my boss. My first tip is to have an emergency fund if you know you can lose your job during a recession. It makes sense to have a fund established for emergencies only, and you want to have three to six months of income inside of this fund that is only to be used for emergencies. If your roof starts leaking after a storm, if you lose your job, if your child gets sick- this is what it's for. the biggest threat to your emergency fund is your wants and not your needs. The emergency fund is often tempting, but resist the urge to "borrow" from this find for fun. Don't use your emergency fund to buy a trip, or get a new cool car or anything else that you desire. An emergency fund for emergencies only, and it will save your ass from high-interest debt.
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My next tip is to have side hustles and other jobs before the recession hits you. When I got the news about my impending job loss, the reality was in one month I was going to have no income. I started looking for work that night, but I also started doing work on the side. Look at landscaping work, look at working at a gas station, look at something with flexible hours and really put in the work. You can easily do a 5 to 6 hour shift extra a few days a week and bring in some good money. You can make four to five hundred extra dollars that way. Try to get a job in an industry that is recession-resistant like a grocery store. Check out e-commerce opportunities and try to sell things online in your off time. A strategy you can use is reinvestment of the seed money from the sales into other items to resell. Look for deals and go on Craigslist, visit Goodwill and thrift shops and look for free items on the side of the road.
Take that money and stick it in your emergency fund. Do not touch it if you know you're going to be out of work soon because you want to get your ducks in a row. Also, on a related note- get your unemployment insurance paperwork together if you know you're going to be laid off and learn about the process. Find out how it works in your state get everything together and be ready for when you are actually let go. Estimate your benefits and how this will affect your budget- adjust your current budget as necessary. Make sure that on the day you will be let go you file your unemployment claim, because you may have what's called a "waiting week" and that week is one week where you don't get paid so get it together and make sure you have your ducks in a row on that front.
The next step is networking, so if you know there's an unemployment crisis you want to make sure you reach out to your professional network and check in on them. You don't have to be coming out of left field with this, but make sure that you're in contact with those you have worked with before including former co-workers, mentors and managers. You want to be agile and if you have to move you have to move it's good to have a good geographic network. If you know you're going to be laid off, talk to your manager at work and reach out and see if there's anyone around the country who needs someone to work there. There may be people in different locales and locations who need someone with your skills. Networking is so key for your professional development and your money management. See if in your area there are young professionals groups, professional societies for your profession and other social/professional groups. Reach out to them go to meetings- be a friendly face dress up really well, during a recession people dress well because we want to make good impressions make sure you do so.
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The next step of preparing for a recession after you've got your networking going, your emergency fund and you're getting your act together is trying to become more self-sufficient in general. During a recession, people garden, people hunt, people fish and they learn how to survive on less. If you have land, make sure that you are gardening and cooking to save. Check out information online about gardening yield maximization and learn about your zone where you live. See what you can plant in all four seasons- you'd be surprised what you can grow where you live and yes, most of the time you can plant. Three to four seasons a year of growth is possible, and you just have to adjust your expectations and increase your palate. Making sure that you're self-sufficient also means you can sew buttons on your clothing, you can repair tools, you can repair your truck's and cars and other vehicles, you have basic handyman skills and you can cook quick and easy meals. Learn these skills now- what happens if you have a leak, what happens if something breaks? You need to know how to fix it to save money this is all about money management.
The next step occurs during the recession. Okay, so reality has hit and you you're in a situation where you could be unemployed or maybe you are unemployed you're working on yourself sufficiency you're helping others, you're being part of the community, you're networking and saving for your emergency fund during this time. It feels like a grind, there's a lot of doom and gloom in the news, there's a lot of negative information about the economy coming, etc. My recommendation is turn off the news and focus on your health. Give thanks for what you have and leave the negative out. There's doom and gloom in the media 24/7 because they're trying to sell clicks. They just want to get you riled up, so pay attention to your situation and focus on positive aspects- focus on health including your mental and physical health. Health is wealth and these are going to be key during a recession. Focus on losing weight, get off of addictions and vices and make sure that you focus on moving forward. This is so important because mental and physical health is what you have your health is your wealth would you rather have a million dollars or health I think you'd rather have the health trust me.
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Take all these guidances and go forth. The recession may be on the way, but you have all the tools at your disposal that you need right now to survive and thrive in a recession. Recessions can be a great time to develop yourself and you can buy things at a discount. You really want to go into it as strong as you can and you want to make sure that you're mentally prepared for what is going to happen love and respect to all and enjoy your day.
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