We’re just about to fall on very difficult economic times. It seems like overnight, the economy went from rolling along with the stock market hitting record highs to a sudden jump off of a cliff.
It’s too early to tell what the financial fallout of the coronavirus epidemic will be, but there are early signs that it’s going to be harsh.
Many of the early warning signs point to a recession, though the term economic depression is being uttered among financial experts. That’s why you should know how to survive a recession.
This isn’t a time to panic, but a time to keep a cool head and prepare. Keep reading to find out what you can do to survive a recession.
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1. Set Aside Cash
In a recession, you’re going to want to have plenty of cash on hand. In a paycheck-to-paycheck environment, you may want to consider taking out a loan to have cash on hand to last for several months of necessary expenses.
That will give you some flexibility and peace of mind in case you have a sudden loss of income.
2. Track Your Spending
One of the best things you can do right now is to track your spending. You’re likely to spot opportunities to lower your expenses.
You can get ahead of the recession by cutting back on unnecessary expenses and putting those funds into your emergency cash account.
3. Don’t Cut Back on Important Business Spending
Are you in business? Keeping your business open during this pandemic is going to be hard. Some businesses were forced to close like restaurants and retailers.
when the economy starts to go south, many businesses react by cutting back on advertising. That’s the worst thing you can do because you’re shutting off the faucet.
Instead, hold off on cutting back on expenses until it’s absolutely necessary. Take a look at your expenses now and prioritize which expenses are necessary and which ones will be the first things to get cut.
4. Consolidate or Eliminate Debt
What is your debt situation right now? Do you have a lot of unnecessary debt like credit card debt? You want to eliminate as much debt as possible.
If you have multiple forms of debt or multiple credit cards, a personal loan to help you consolidate your debt will be a smart move right now.
5. Think Long-Term
There’s a difference between reacting to a recession and responding to a recession. What we’re seeing right now with the stock market is a complete emotional reaction. You don’t want to act like the markets, but instead.
That will only result in short-term thinking that won’t help you come out ahead in a recession. If you have enough cash set aside, you can put that towards long-term investments. Consider something like gold or other assets that you can depend on for growth.
6. Build Your Networks Up Now
You don’t know if or when you’re going to lose your job. It’s a very strong possibility as businesses brace for the worst. Many restaurants a retail store have already closed, and some estimates say that unemployment can hit 20%.
That’s an extraordinarily high number not seen since The Great Depression. On the plus side, there are still 80% of people that are employed.
You want to make sure that you’re in the best position possible to be in that 80%. The best thing you can do right now is to build up your networks. Of course, large networking gatherings are off-limits right now. However, you can build up your network one person at a time.
Clean up your resume and work on your LinkedIn profile. Start reaching out to other professionals in your industry and do what you can to add value to their lives.
Ask them how they’re doing in light of the crisis and if there’s anything you can do to help them. You may be able to make an introduction to your own network.
Other places to look for networking opportunities are alumni associations and trade associations. Some of these associations have shifted networking online, so look for opportunities to join in these gatherings.
7. Take Action Now
The worst possible thing you can do is wait until the stuff hits the fan and then act. If the coronavirus taught us anything, it’s that being proactive matters and makes a huge difference.
You have to take that lesson to heart and prepare yourself and your finances for the hit that’s most likely going to happen.
The longer you wait to take action, the harder it will be to gain traction. The key to surviving a recession starts by taking action now.
8. Keep Calm and Know That This Will Pass
Things are in a state of constant flux. It’s hard to focus and it’s hard not to keep your eyes peeled on the news and on social media.
That will only heighten your sense of panic and anxiety. The way to survive this is to stay calm and have a cool head. You don’t want to make important decisions based on fear and panic.
Those are likely to be the wrong decisions.
Give yourself a mental and emotional break. Turn off the TV and step away from social media. Go for a short walk outside and reset yourself.
This is going to be a very challenging time. The more space you take from the situation, the easier it will be to make sound decisions.
Just like every other major event that we’ve been through, this too will eventually pass. In the meantime, stay calm.
How to Survive a Recession
Many people are hoping that the year 2020 will just go away. While it would be great to start the year over, we don’t have a time machine to take us back.
It’s important to stay informed because things are changing so quickly. It’s just as important not to get swept up in a panic.
All we have are the challenges of the present moment. We’re very likely on the verge of an economic recession due to the fallout of the coronavirus pandemic.
How to survive a recession starts with having enough cash set aside to manage it, track your spending, and act as if you’re going to have a sudden drop in income or lose your job.
Read this article that explains what you can do if you can’t pay your rent on time.