Strategies for living with a recession

As if these times weren’t challenging enough, alongside a global pandemic we are currently facing huge amounts of financial uncertainty. This is likely to last for the foreseeable future as the entire world is either in or expecting to go into recession.

I want to be clear, none of what I am writing in this piece is expert financial information, you will need to consult a Financial Advisor for specifics but what I am offering is a bunch of tried and tested simple techniques – that work.

Sometimes we need a reminder that the simple things are often overlooked either because we convince ourselves we don’t have time to take care of the boring and the mundane things of life but also because we often believe that because things are simple, they probably won’t work.

My first real experience of a recession was in 1990/91. During that time I was a) going through a divorce (that’s a whole post in itself) b) selling my flat because of a) and c) was then made redundant – literally the icing on the cake. In a matter of months, I experienced 3 of the top 10 most stressful life events you could have and each one appeared to be out of my control.

I’m not going to pretend it was easy but by facing things head on and working out what I could control, no matter how small, I got through it.

And that’s what I want to encourage you to do. The coming recession might be beyond your control but you can work out what you can control and you can work out how to respond. It might be baby steps to start but from there you can plan how to deal with what is happening now and how to prepare for what is coming.

It’s important to take some steps to protect your finances before the recession properly hits as it can make a world of difference to your mindset.

When you know you have done as much as you can, you have less to fear and less to get overwhelmed and in a panic about.

You can’t control the world but if you take the time now to look at what is going on in your life, you can ensure that your bit of the world is ready for whatever comes your way.

So what can you do?

Tip #1

Do a financial review of your banking and your overheads

Look at all of your outgoings and see where you can make some changes to save some cash. Could you make some savings by switching utility providers? Check out what your bank or credit card company is offering – are there some deals or an interest free overdraft that you could benefit from?

List out everything that you spend on a monthly and annual basis so that you can see exactly where your money goes (and I mean everything, I can tell you that will be a real eye-opener). Then look at where you can make savings.

Prioritise your spending, this is probably not the best time to make big non-essential purchases.

If you have saved money from working at home during lockdown, perhaps from not having your usual coffees or going out for drinks after work or perhaps a travel card refund – could you start a rainy day fund for any unexpected expenditure or as a buffer if money gets tight?

Or if you have some debts could you use some of the money you are saving to pay some of that off? Anything to help save on the monthly repayments going forward.

Tip #2

Review your spending on all those ‘little’ things

Okay, I’m not here to tell you to punish yourself by getting rid of all of your treats – far from it, treats are still allowed!

This tip is all about looking at the things that you pay for on a regular basis often without realising. Are you paying for subscriptions or memberships or anything at all that you don’t really want anymore?

You know what I mean, the direct debits that you set up 5 years ago for a magazine that you barely read when it arrives each month and each time you see it you think “I must cancel this” and you never do.

Get in touch with all the relevant companies to cancel and don’t forget to cancel your DD too.

Remember this is not about getting rid of things that you love or things that are a real tonic for you, it’s an opportunity to plug any financial leaks that are seeping out of your well-earned cash. If you can learn to make do with less, you can add to the rainy day fund or pay off some debt.

I think the term living frugally sounds quite off putting, but think of it like this – it shouldn’t be about depriving yourself of joy. It’s about making conscious spending decisions that reduce your outgoings but without major lifestyle changes. I still don’t like the word frugal though…

Tip #3

Positive future plans

This is not about anything financial – unless you want it to be. I would like to encourage you to make some positive plans for the future regardless of the talk of an impending recession.

Think of some micro-goals you can achieve – those that will make you feel good. Maybe it’s about getting fitter or learning something new – it’s about anything that truly inspires you.

Just because we can’t travel at the moment, if your goal is to see the world start to make your plans and when the restrictions are lifted you already know where you want to go.

If circumstances mean that you have to make changes down the line, then remember the first few weeks of lockdown – you’ve been through so many last minute changes already recently, you can handle anything.

If you feel inspired and passionate about yourself, your life and the people that are in your world, it’s going to be far easier to deal with whatever gets thrown at you.

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