The risks of economic recession are very high on both sides of the Atlantic.
While with inflation and rising interest rates the purchasing power of many households is drastically reduced, with an economic downturn comes increased risks of job losses and reduced working hours.
Different technical definitions have been given to an economic recession. But, essentially, it is
of a period when economic growth drops dramatically with an increase in the unemployment rate“, specify Walid Hejazi and George Georgopoulos, respectively of the University of Toronto and York University (Canada), on the site The conversation.
During a recession, businesses are forced to cut back on hiring, lay off workers, and cut working hours.»
How to prepare
Hejazi and Georgopoulos present six tips for proactively preparing for an economic downturn. They encourage “
plan for the worst and hope for the best“.
Immediately reduce your expenses
Reduce your expenses immediately, especially those on non-essential items.
Take the opportunity to review your budget and reconsider the daily shopping habits that are multiplying. Rather than dining out every day, consider preparing a meal. Review these subscriptions that are automatically deducted from your account each month. This is the perfect time to analyze and justify your buying habits, and to revise your budget. »
Pay off your credit card debt now
Pay off your credit card debt now. It is important to pay off high interest debt as much as possible, as soon as possible. Over the next few months, interest rates will continue to rise, which will make debt management more difficult. Lower balances help reduce the amount of interest payments during any period of income or job loss, making it easier for the portfolio to weather tough times.»
Pay special attention to paying bills
Pay close attention to paying bills and avoid late fees. These fees also accumulate over time. Make a plan to make sure bill payments are made on or before the due date. Paying bills late leads to monetary penalties, which you always want to avoid, but especially during a recession.»
Be prepared to lose your job
Be prepared to lose your job. Make sure your resumes and cover letters are up to date and you’re ready to look for a job. In the event of dismissal, be prepared to find another position quickly.»
Become more easily hired
Become more employable. As recessions generally hit people with less experience and less qualifications the hardest, you should update your professional skills. Explore virtual options that offer excellent upskilling opportunities, or face-to-face training at colleges and universities across the country, to further your education and increase your skills.»
Try to get a recession-proof job, if possible
If possible, try to get a recession-proof job. The jobs best suited to an economic downturn depend on skill level, but are generally found in the public sector, healthcare and education. Of course, these jobs are not for everyone. Everyone should consider options that match their abilities and preferences. This strategy is much more effective when your skills and resume are up to date and you are well prepared.»
Some of these strategies are easier to implement than others“.
Plan for the worst, hope for the best
It is always necessary, underline the authors, to prepare for the worst while hoping for the best.
“Recessions, or economic downturns, are part of what is known as the business cycle, which describes the ups and downs of the economy. They usually occur once a decade and sometimes more often. People should always be well prepared for such downturns.»
It is much easier to apply the above strategies well before a recession, rather than waiting until the last moment. The closer we get to a recession, the more difficult it is to prepare well by applying these strategies.»
For more information, see the links below.
Psychomedia with source: The Conversation.
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