Is your spidey sense tingling? I don’t know about you buy my spidey sense is tingling and when that happens it means an economic recession is coming so how prepare for one?
Loss of Job
The worst thing that typically happens during a recession is people lose their job. In 2008, when the financial crisis hit, I was let go from the firm I was working for but it turned out to be a blessing in disguise.
After I was let go, I received a severance package but I also (and more importantly) had a chance to get ALL of my money out of the company’s deferred compensation plan. I had to wait 6 months to get my money but a few months after I got my money out, the firm filed for bankruptcy. I knew co-workers who lost millions when their stock became worthless or they weren’t able to pull their money out of deferred compensation plans. It only took me a few months to find another better higher paying job and continue on from there.
Save! Save! Save!
Knowing that a potential loss of job will result in loss of income, the best thing to do is to save as much money as you can. After I got laid off, I (temporarily) cut all non essential expenses that included not dining out, going to movie theaters, concerts, plays, etc. I also switched from name brand items to the cheapest generic items that I could get by with since I knew it would only be temporary. I would also visit the big box store and stock up on items on sale like laundry detergent and non-perishable foods.
In order to actually be prepared to do all of this however you need to know where your money is going. Using a spreadsheet to track expenses or software like Quicken or Mint to do it on your behalf will go a long way. The time to do that inventory of expenses is NOW not when the recession comes nor after you’ve lost your job.
Right now, I cut some non-essential streaming services like Hulu but retained Netflix. Other things I might do is re-examine my cell phone plan and internet access plan. I also recently went to the big box store and bought 25 lbs of rice that I vacuum packed into smaller bags for long term storage.
Job Hunting
The other thing I am doing right now is updating my resume adding recent accomplishments, activities, and skills. I am also taking some free online courses that my employer is offering through LinkedIn and other services. While I have no intention of leaving my present employer, it doesn’t hurt to upskill and take advantage of free educational offers.
The other thing I’m doing is checking the job market on websites like Indeed and others to see what the market looks like. I may start job interviewing for jobs that I really don’t want to get practice doing interviews so when I do find a job that I really want, I am well prepared to the type of questions being asked and feel more confident going through the process. If you wait till AFTER you lose your job you will likely be desperate and that will show through during your interview.
If there is a job out there that I like and am offered the position then I really need to do an analysis of my existing firm and find out how probable it might be that the company I work for will either execute mass layoffs or end up bankrupt at some point. I will ask myself if I am better off leaving now or waiting for a layoff?
Support Network
Depending on how bad the recession might be, you may need to prepare for the long haul. Fortunately I found a new job within six months of losing mine and it ended up being a nice break from working but I was also fortunate to have a support network of family and friends that were on standby to lend me money, offer me temporary work, or help anyway they could and I am greatly appreciative of having such an awesome support network. If you don’t have such a network then it’s never too late to start building one and all you need is to start with one friend and build from there.