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As the U.S. economy heads toward a possible recession, it’s always a good idea to have a game plan for surviving such a downturn whether that means developing a side hustle, going back to school, or simply avoiding debt. Here are some smart ways to keep yourself afloat when the economy is on shaky ground. (History's lessons still apply, too. Here are 12 Things We Can Learn From the Great Depression.)
Related: Things You Really Don't Need to Buy During a Recession
As any savvy business owner will tell you, the best tip to get through any form of an economic downturn is to diversify, says Chris Panteli, creator of LifeUpswing. “You should definitely have at least one side hustle going on at any given time,” says Panteli. “This could be making money online by blogging; doing surveys, or being a virtual assistant. The point is, the more varied income streams you have, the better protected you are from a recession.”
Vendors and landlords are going through the same recession you're going through, and they could be losing clients and money, says Camille Chulick, co-founder of the skincare company Averr Aglow. “If you have a good relationship with vendors or a landlord and they want to keep you around, they could be interested in boosting your loyalty by lowering costs for your business,” says Chulick.
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Have your utility company do an energy audit to identify areas where you’re using the most power each month, says Jeff Rose, a certified financial planner, author, and founder of Good Financial Cents. “Try to find ways to lessen the energy you use. Take shorter showers, make sure all appliances are unplugged when not in use, and turn out the lights when you aren’t in a particular room or area,” says Rose. “Not only are these practices environmentally conscious, but they will also lower your utility bills each month.”
The price of the annual membership for wholesale clubs like Costco or Sam’s Club, often pays for itself via the amount of money you save on your first shopping trip, says Rose. “Plus, you can buy a variety of non-perishables in bulk at low, wholesale prices,” Rose explains. This is one of the best ways to save on the things you need to buy without the hassle of keeping track of coupons or promotions, which can change from week to week with normal grocery stores.” Not a member yet? Join Costco here, join Sam’s Club here, or check out BJ's Wholesale Club if they have one in your area.
Bad debt is any debt that isn’t incurred purchasing something that maintains its value or increases your chance to profit, says Morgan Taylor, CEO of Jolly. “Never get things you don’t need on credit, as the current financial crisis could turn bad debt into a black mark on your credit rating,” says Taylor. “And the last thing you need in a recession is poor credit, as that limits your financial options.”
Review your bank account and monthly spending with a critical eye, identifying all the purchases and expenditures that weren’t essential and find ways to eliminate these items. “For many people, it isn’t the big expenses that add up, it’s the little things. The coffee on the way to the car, the little gifts for people, going to see movies. Little things can rapidly accumulate into huge monthly expenses,” says Taylor. “The problem with judging your own finances is that you’re invested in everything you purchased, so pretend you’re going through someone else’s accounts, and looking for their non-essential expenses. You can also ask a friend to help you look at your expenses, as they will see things you miss.”
You don’t have to be Tony Robbins or Deepak Chopra, but if your name is synonymous with a very niche type of professional work, it will help you secure you more jobs and more opportunities, says Robert Brill, CEO of Brill Media. “This is how you recession-proof your income and keep yourself always in demand. To do this, you can start a podcast and interview middle or senior managers in your industry, or post once a day on LinkedIn about news from your industry or share your insights in a blog, and push out blog posts across LinkedIn,” says Brill.
While there are many ways to save money when having a baby, it can also be stressful and very costly, putting even more pressure on your household budget during a recession, says Rachel Ritlop, a podcaster and founder of TheConfusedMillennial. “We decided to hold off on having another child until the impact of the recession is clearer,” says Ritlop.
Many people are trying to live within a budget right now and may be trying to eliminate all "wants" from their spending, says Rebecca Hunter, CEO of The Loaded Pig. Unfortunately, this bare-bones approach may lead to impulse buying and in some cases racking up credit card debt, says Hunter. “One way to prevent impulse buying and to maintain mental health is by allocating a small amount of your monthly budget to ‘wants,’ ”says Hunter. “Whether it's take-out at your favorite restaurant or online shopping, set aside a small amount of your budget each month for those wants.”
When finances are tight, every penny counts, says. “Apps like Rakuten require very little effort, and you can earn cash back by using them when shopping,” says Sam Hawrylack, a personal finance expert, co-founder of How To FIRE and CEO of SJ Digital Solutions. “Rakuten is ideal for online purchases. Each store gives a percentage or a set amount of cash back on each purchase.”
Sites like Coursera showcase free online educational opportunities on all types of subjects. “You can learn how to successfully negotiate with the University of Michigan or join Yale University for a class on the Science of Well-Being. This is a fantastic, affordable opportunity to learn more about specific topics you are interested in, both professionally and personally. You may even be able to mention your enrollment in these classes on your resume or discuss what you learned from taking these classes during job interviews," says Deborah Sweeney, CEO of MyCorporation.
While many companies were forced to furlough or lay off employees amid the pandemic, many others are still hiring, says Bart Turczynski of ResumeLab. “Slack, Zoom, Uber, and Amazon are just a few of the companies that are on a virtual hiring spree. Try to see how your current skills and experience fit at such companies so that if necessary you can reorient your job search to where the demand is,” says Turczynski.
If you need to reduce your monthly outlay for the short term, you may want to shift some debt to low- or no-interest credit cards, says Baruch Silvermann, CEO and founder of The Smart Investor. “If you have above-average credit, it's likely you'll qualify for a credit card that offers zero percent interest on balance transfers for a period of 12 months or more,” says Silvermann. “If you have a high-interest credit card with a balance, moving that over to a credit card with zero percent interest could save you a lot of money in the short term. Moving the debt from one card to another obviously won't get rid of the principal balance, but it will allow you to keep extra cash on hand while you try to get through this situation.”
Related: 26 Tactics for Getting Out of Debt
If your finances haven't been directly affected by the coronavirus pandemic, now is a great time to beef up your emergency fund, says Silvermann. “Keep approximately three to six months' worth of expenses in an easily accessible savings account in case you need it,” says Silvermann. “This emergency fund can help you pay for life's necessary expenses, such as housing, transportation, and food.”
A recession may be a good time to lay the groundwork for making a pivot in your career, says Terry McDougall, a career coach and author of Winning the Game of Work: Career Happiness and Success on Your Own Terms. “An example would be to begin volunteering in order to gain more experience, or taking part in a certificate program to make yourself more marketable,” says McDougall. “For a small investment, there are also certificate programs you can participate in online, which are offered through top universities and Coursera. The topics run the gamut — you can learn about data analytics, project management, digital marketing, and a whole host of other skills.”
English-teaching roles have a fairly low barrier to entry and can pay quite decently, says Turczynski of ResumeLab. VIPKid and other services "provide you with an opportunity to teach youngsters English while making ends meet. Some programs have minimum duration requirements, but this can be an opportunity worth considering.”
As challenging and stressful as a recession can be, don’t let yourself be consumed by the idea that you’ll be in a crisis forever, says David Foley, a spiritual teacher and founder of the meditation center Unify Cosmos. “Compose yourself, be mindful, and look for actionable solutions,” says Foley. “Avoid falling into the trap of anxiety and depression by keeping a positive attitude and meditating from time to time. Know that by having a brighter outlook, you will get through this recession before you even know it.”
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