While living in the midst of a recession is undeniably a scary and painful experience, there are steps you can take to better prepare yourself for potentially difficult financial times. Don’t panic! Reacting and selling stocks based on fear is the worst financial decision you can make! If you take money out of the market there is no chance you can earn it back. Have a little patience and a little faith. Things won’t stay bad forever.
1. Remaining employed through a recession should be the top priority. Whatever it takes. Perhaps it means putting in extra hours, taking on greater responsibility, taking additionally training to improve your job skills – whatever it means, keeping your job is the best indicator that you will survive the recession.
2. Be prepared if you do lose your job due to layoffs. With the unemployment rate approaching 10%, no one is immune. Always be prepared for a surprise. Keep your resume updated, (if it’s out of date, now would be a great time to spruce it up) network with friends and colleagues, take advantage of social networking sites to put feelers out.
3. Earn extra money by picking up a second job. A second income that can be devoted either directly towards your savings, or directly towards your bottom line can make a huge difference if you find yourself unemployed.
4. Reduce your expenses where you can. If you can refinance your mortgage and take advantage of the historically low interest rates, refinance high interest credit cards, and reduce your spending, you will greatly increase the amount of money you are able to devote to an emergency fund.
5. Buy only what you need. Skip the luxury items and buy only fundamentals. Doing an analysis of your spending will help you to figure out where you can cut corners and still make due.
6. Bargain shop! Use coupons, take advantage of sales, challenge yourself to not buy anything at full price and watch how much you save in a month.
7. Avoid going into further debt. Many of the economic problems we are experiencing now are a direct result of borrowing beyond our means for far too long. Don’t exacerbate the problem by charging things you cannot afford.
8. Conserve energy. Turn off lights when you leave a room, turn down heat and make due without air conditioners. See how much using less of all these things cuts your monthly expenses. Whatever money you save, you can donate to your savings.
9. Buy things in bulk (but only what makes sense to buy in bulk). Buying something in bulk for the simple fact that you will save money defeats the purpose if it is not an item that you need to have. Things like toilet paper and paper towels that you will always need and run no risk of spoiling make sense to buy in bulk to save a few dollars.
10. Don’t pay someone to do something you are perfectly capable of doing on your own. That’s money that can be spent elsewhere. Cut landscaping and housecleaning from your budget and do these tasks on your own.
11. Pretend you’re broke! The best way to save money is to pretend you have less than you do. Give yourself less money to play with each month. Make it a game. See how little you can get by on.