How To Survive A Recession Without Burning Through Savings

There is a risk of a global recession in 2023– This has been predicted by many economists. As the central banks of countries around the world are resorting to an increase in interest rates to meet the sudden price rise after the pandemic, it is time to understand how to survive a coming recession.

Before we move further, here’s an interesting yet alarming quote from the World Bank Group President David Malpass on impending recession, “Global growth is slowing sharply, with further slowing likely as more countries fall into recession. My deep concern is that these trends will persist, with long-lasting consequences that are devastating for people in emerging markets and developing economies.”

So, if we were to take his word literally, what options do we have at our disposal?

Being vigilant and taking appropriate steps well before time can help people to swim through a recession smoothly. Just keep your head above water by not panicking and staying ahead of time.

Here are some concrete steps people can take to survive a recession (without burning through savings):

How to survive a recession?

Upskill

Adding new skills to your job profile can be the most effective way to survive a recession. The rise in prices not only increases the risk of job loss but can also make current earnings insufficient. Now is the best time to learn a new skill and widen the horizons of your capacities.

This is the right time to indulge in online learning and learn new skills of writing, designing, marketing or developing- without skipping current jobs. Research reports have shown that added online certifications and credentials do boost your job compensation.

For this, it is the best time to enrol in online schooling and courses. It is suitable for learners of all ages and the best means to upskill and prepare for the possible recession on the way.

Learn to cut costs to stay within budget

Saving and staying within budget can never go wrong. During economic phases like recession, saving and cutting costs is the best way to survive. Don’t wait for the recession to show its colours. Instead, plan and stay within your budget way before it. Start with cutting down on unnecessary costs. Defer spending on buying cars or other luxury items for a while. Cut down on your daily junk diet and most importantly, strike a balance between your wants and needs.

Cutting down on taking big loans is also a smart move to keep up with the changing economic scenarios. For families with kids, switching to homeschooling is also a great way to cut down on costs. Online homeschooling is way more affordable than its counterparts due to the absence of any infrastructural costs. Moreover, it is a flexible medium of learning that provide one-on-one personalized learning, trained teachers and involves a research-based curriculum.

Diversify your income sources

While learning new skills is one way of expanding your income figures, one can also look for other income sources through their current skills.

Essentially if your current job is at risk of getting affected by a recession-prone industry, it is vital to have more than just one source of income. Use this opportunity to look for side hustle (part-time jobs) and more conveniently work from home jobs like freelancing gigs to cover up for the prospected income loss.

Build an emergency fund

Deposit a fixed amount of money in a set-aside emergency fund to prepare for the coming recession. This is one of the ways to cut down costs. Banks these days allow their customers to build emergency funds through their apps. This can be the easiest way to start saving without having to visit a bank branch.

Building an emergency fund is now easier than ever. We suggest not deferring the task of opening an emergency fund any longer.

Take wise steps with your existing investments

What about investments? Do experts suggest investing at this point in time? Should investors with slump portfolios hold or sell off their current investments? There are many questions in the mind of investors.

As per experts, a recession is just another economic phase that isn’t going to stick forever. Recession is no excuse to not invest. The only suggestion would be to invest wisely. Do not invest in companies that are most likely to be affected. Some industries always stay recession-proof like health care, daily utilities, consumer staples and more. Remember, not every industry is affected equally.

Talking about your existing investments, if they are going down in value day by day, experts suggest holding on to them and not selling them off in a panic. This erratic behaviour worsens the market furthermore. If the investor has sufficient idle money and won’t impact their current standard of living, it’s best to hold on to them.

Final words…

While some economists hint at 2023 recessions, few also predict the economy may be able to narrowly avoid it. No matter what, being prepared is the best way to deal with the crisis. Being prepared will allow you to sail through recessions and any such financial crunch without living like hanging on a wire.

Follow these easy-to-follow tips to survive a recession like a pro. Start today to prepare for tomorrow.