Recessions are tough times for everyone and every business. However, there are ways to recession-proof your life. In this post on how to survive a recession, I will provide some tips that hopefully will help us all.
You can’t leave everything to fate there are steps you can take to sail through this difficult time. You can arrange your finances in such a way that you will come out at the end in one piece.
Table of Contents
1. Spend Less Than You Earn
During a recession, you will do well if you can make sure that you spend less than you earn because these are uncertain times. The problem with living beyond your means is that you will have to enter into debt to finance that lifestyle.
And anyone who spends more than he earns will have no cushion if things go down south. He may actually be forced to go into more debt and make things worse for him financially.
Spending more than you earn is bad in any period. We all have to discipline ourselves in our spending.
When we learn to discipline ourselves in our spending we will be able to save money that will help us in difficult times.
2. Create An Emergency Fund
If there is one thing you should do above all else is to create an emergency fund. I have written an article that discusses how to build an emergency fund that you may need to read.
Actually, creating an emergency fund is one thing that you should do even in good times as you will need it in times of emergency. And a recession is one of those major emergencies you will face in your life.
If you think this is too much look at the lines that form at food banks during recessions. As I am writing the world is going through some tough economic times due to a pandemic and millions have lost their jobs.
And because most people were living paycheck to paycheck it has been a difficult time indeed. It has led bare the need for all of us to find a way to save some money when things are still alright.
I am aware that there are other problems that have been laid bare such as the fact that the wages too are very low for millions of Americans. Millions are being forced to work more than one job just to survive.
I, therefore, know that it will be difficult for the low wage earners to save anything. Unfortunately, when a recession comes it does not discriminate. It is because of this that the next point will help you find other means to earn more income.
3. Find Other Ways To Earn Extra Income
Another way you can survive a recession is to find other ways to earn extra income.
As I have already pointed out earlier many of us are just living paycheck to paycheck. We spend everything we earn leaving nothing for savings.
If you can find other ways to earn extra income you will be secure financially during a recession. When you lose your job you will have something to fall back on.
One of the easiest things you can do especially before a recession is blogging. I know that it is possible to earn a living through blogging. You just need to be patient and work on building your blog properties over time.
It is not a get rich quick scheme, unfortunately. You must be prepared to put in the hours writing content, etc. If you work hard there is a high probability that after a year or two you can earn enough to match your salary.
If you are interested to learn from people who have been creating properties that have been able to earn $5 to $10,000 a month after a year or two then try Income school.
And if you just want to learn how to create a blog I urge you to visit a post I wrote a few months ago. It is called, How To Start A WordPress Blog on Bluehost.
Another way you can earn extra income is through being a flea market vendor. I have a friend who makes a living selling stuff at a flea market.
I, therefore, know that it is possible to earn extra income at a flea market. I have a post that goes through how you can make money at a fleamarket. I would urge you to visit that post and see if being a flea market vendor is for you.
If you are not comfortable being a flea market vendor you can still flip items for profit online. In that way, you won’t have face to face meetings with buyers.
Actually there are literally thousands of things you can do to earn extra income online or otherwise.
4. Make Sure Your Credit Score Is High
I am not a big fan of debt but I am also a realist and I know that they would be a time when you may need to borrow. This is especially true in a recession when time may come when the only way to stay afloat would to borrow some money.
In such a sitution you will need to have a high credit score if you are to be given one.
If you are facing problems, call your lenders to discuss how they can help you to sort out your repayment issues. Don’t assume that they won’t want to help you. They need your business too now or when things start looking up.
5. Diversify Your Investments
Another way to make recession-proof yourself is to make sure that your investments are diversified. In this way, if you make losses in one those losses will be offset by other investments.
For example, if you are into stocks you can make sure that your investments are in different industries. For example, they are sectors such as the retail, food, and beverage sector that still do well in a recession. The gold mining sector also performs well during a recession.
Sectors such as the banking sector usually struggle during a recession.
If you, therefore, have a diversified investment portfolio you could easily weather a recession.
6. Not A Good Time To Take Risks
If ever there was a time to be a conservative in your investing and decisions then this is the time. When the economy is not doing well you can easily lose big.
It is therefore important to suspend some investment decisions until you some uptick in the economy.
This is not a time to gungho with your financial and investiment decisions. It will be like playing russian roulette with your resources.