How to Survive and Prosper in a Recession

Recessions are like death and taxes, they eventually turn up no matter how hard governments and central banks work to keep them away. However, this is a truism that people don't like to think about, especially after a long period of expansion such as the one we've been enjoying in Britain. There is huge temptation to pretend that current conditions are permanent and that nothing bad lurks in the future. But for those who refuse to think a recession will happen let alone plan how to survive one, when the inevitable happens, it hits them hard.

Is it possible to recession-proof your life? It is, with a bit of work and planning, while you are still in employment.

1. Make sure you have at least three months emergency cash savings, preferably six months, that will enable you to live and continue to pay the mortgage if you lose your job and have to look for another. The mortgage is the most important debt you have to service as it is secured on your home, which you stand to lose if you default.

2. Once you've got your emergency savings in place, start paying down credit card debt and unsecured loans, and once these are paid, start reducing your mortgage debt. If you've got the time and energy, take a second job now and earmark the earnings to paying down debt.

3. Middle managers are most at risk during a recession. Middle management is a stage in your career when you are most vulnerable because you are expensive enough for you to be a tempting target for cutbacks, while not being senior enough to be protected from being removed, but not junior enough to be protected by working at the customer coalface, factory floor or place where the company's basic objectives are delivered. Ask yourself how dispensible you are. If you feel your company can do without you, try to move within your company to a position now that is less vulnerable.

Office politics sometimes play a part as to who goes and who stays during cutbacks. Don't make enemies and don't get yourself a reputation as a grumbler or a trouble-maker. Also, a boss on his way out can hurt you if you are seen as too close to him. Try to find another sponsor in this case and try to be on good terms with all the senior management.

4. Try to broaden your skills. In some industries, eg IT, qualifications become obsolete very quickly. Make sure you take your professional exams and keep up to date with the latest developments. You don't want to leave it till you are out of work, as it may be a few months before you can take your exams. Try to identify other areas where you can make a living and develop them.

5. Cosy up to the people in the accounts department: they will know first if the company is having cash-flow problems, always a signal that things are going wrong. In one case I know of, the accounts department knew months ahead of everyone else that the company was haemorraghing cash and business contracts were not being renewed, while the management was still telling the staff that everything was fine. The staff only found out when they were suddenly not paid...

6. If you find yourself out of work, don't decide to take a holiday "because you deserve it". Sign up to a temp agency immediately and take any job going, even if it's just filing. The idea is to make sure you have some money (however little) coming in, so that your emergency cash lasts. It's surprising how quickly savings can evaporate. Temping also means that you are inside another organisation, and you can network and put out feelers to see if there are any permanent openings there - it's easier to find these things out from the inside of an organisation than outside.

In this situatuion, cut back on outgoings. The temptation is to try to maintain everything as it was, but this is fatal as it eats up your emergency cash. Stop the takeaways, stop going out, stop all un-necessary expenditure till you are back on your feet.

7. During recessions everything tends to fall together - you lose your job and find that the stocks and shares you'd accumulated have gone down. Make sure your investments are diversified so that you don't experience a loss on all your assets together, and make sure you have some cash, so you don't have to sell shares at the bottom.

8. This might sound obvious, but try to do a good job in the position you are in now - companies that survive recessions do so because their staff put in a good job. Besides, you will want to get the best recomendation you possibly can.


Useful related posts:

Your Rights Under Law When Being Made Redundant (UK)

What to do if you can't repay your credit card debt

What to do when property prices start falling

Increase your income by taking in lodgers

Increase your income by earning online

Other ways to raise money


Info on sites that collate information on bargains and discounts (so you can reduce your outgoings):

- List of UK Bargain sites

- List of US Bargain sites

Useful posts on Saving money on petrol/gas and driving costs

- How to Increase Fuel Efficiency When You Drive

- Website that helps you find the cheapest petrol station in your area (UK)

- Speed Camera Database - Info on where speed cameras are located (UK)