10 Tips for Surviving A Recession

Unemployment in the UK is rising at the fastest rate since 1992, inflation has shot up faster than wage growth, house prices are falling and general economic confidence has slumped. Most economists feel that some form of a recession is now inevitable. These are some tips to help survive an economic downturn.

1. Don’t Panic

Things are bad, but the media tends to exaggerate the extent of a downturn. Statistics can be misleading as media tend to focus on the most eyecatching statistics. For example:

• Petrol and food prices are increasing by 20%, but, other items in the CPI are falling.
• Unemployment is rising at the fastest rate since 1992, but, comparatively it is much lower than any time in the 1980s.
• Recessions tend to be short lived 12-18 months. (see: How long do recessions last?)

2. Spend Frugally

With disposable income stagnating or even falling, spend frugally. Discount shops such as Matalan, Aldi and Primark have seen increased demand as people look for good value. A squeeze on household income is a good time to look at reducing unnecessary expenditure and making economies which don’t harm your living standards. See: Ways to avoid overspending

3. Stay Positive.

If your firm is looking to make redundancies, it is important you give compelling reasons for the firm to retain you. Dress smart, be cheerful and optimistic. Don’t annoy your boss by asking for a large payrise or always talking about redundancies. If you are willing to adapt to more difficult circumstances and work with a helpful attitude, the firm will be much more likely to retain you in any wave of redundancies.

4. Be Aware of Alternatives.

Don’t feel your present job is the only option for you. The labour market is becoming increasingly flexible for skilled and motivated workers. Stay alert for ways to increase your skill base or  options for second incomes. Don’t wait before you are made unemployed; keep your eyes out for alternative jobs - changing sector if necessary.

5. Different Sectors will be Affected in different ways

The current recession is hitting hard sectors such as construction, motor industry, real estate, retail and banking. If you are in these sectors it is even more important to work on alternative sources of income and jobs. Some sectors such as education may be largely unaffected.

6. Recessions create opportunities.

Recessions generally lead to lower demand. But, some sectors can profit from recessions. For example, high oil prices are encouraging people to consider cycling and public transport; consider the options in these sectors.
7. Dealing With Unemployment
If, despite your best efforts, you are made unemployed, these are some tips

• Don’t feel guilty or bad
• Keep positive in your job search
• Be willing to consider jobs outside your previous employments
• Try to avoid financial misery create difficulties in your relationships. Talk through economic problems and avoid unrealistic expectations.

8. Struggling with Mortgage

If you are struggling with your mortgage payments, you may face a double problem of negative equity as well. There are various things you can do if struggling with mortgage payments, such as temporarily choosing interest only mortgage or extending mortgage term. See: Struggling with mortgage payments

9. Remember Money isn’t Everything.

Don’t feel that financial well being is the only thing that matters. Even in difficult times, don’t lose perspective and allow yourself to be depressed. With the right attitude a frugal lifestyle can have its own pleasures. Just remember the Monty Python sketch - The Four Yorkshiremen

THIRD YORKSHIREMAN:

But you know, we were happy in those days, though we were poor.

FIRST YORKSHIREMAN:

Because we were poor. My old Dad used to say to me, “Money doesn’t buy you happiness, son”.

FOURTH YORKSHIREMAN:

Aye, ‘e was right.

You Tube video

10. Budget

If your income falls, work out a budget to deal with the new financial reality. It may be painful, but, it is worse to live with the same expectations as before and end up with increasing levels of debt.

• What does it mean to be in a recession?