Sometimes it feels as if the bad news just keeps on coming. After months of lock down, many businesses are floundering and we face an upcoming world wide recession. So can you mitigate the damage and help yourself and your family survive a recession?
I asked some respected bloggers from the UK Money Bloggers community for their advice on the top actions they think people can take to help them survive a recession.
Some of the questions I asked were: What should you do if you are threatened with redundancy or have already lost your job? Should your focus be on saving or should you try to pay off debts? Could a recession end up being an opportunity? How can you lower expenses? Is it possible to make money in other ways?
Here is what they said.
Tips to survive a recession
If you have lost your job
Kemi Shobowale thinks it is vital to claim the help you are entitled to and try to keep a positive mindset:
“Make sure you get the right professional help and advice (from charities/government/CAB, etc) and understand what you may be entitled to that could help. Many government benefits do not get claimed, such as married couples allowance, because people are not in the ‘know’.
“Also, it’s important not to worry. Easier said than done, yes. But worrying doesn’t make things any better and could make you sick with stress and anxiety.
“Stay calm and keep a positive mindset. This will help you stay focused and come up with new ways to make money by other means. Who knows, now might be the perfect opportunity to explore new paths. Maybe even start that business you’ve been dreaming of.”
Redundancy advice
Halimah Omogiafo has the following advice:
“If you’ve been made redundant, there are three things to consider:
“Firstly, how much money do you have, and how long can that last you? If you have an emergency fund, that’s great. You are going to need it.
“When using your emergency fund, be careful not to spend as you typically would. If it is the equivalent of three months’ living expenses, for example, plan to use it for longer than three months. Try to cut your costs as much as possible – cancel unnecessary subscriptions, reduce waste, and cook your meals.
“If you were unable to build an emergency fund and have no savings, you may want to look to the government for help. Try as much as possible to stay away from payday lenders.
“Secondly, are you able to start applying for jobs immediately? If so, don’t waste any time. Start applying.
“Thirdly, do you have any skill that can help you make money right away? If you do, leverage that. Now might be the time to resurrect that old blog or launch that Christmas shop you’ve been thinking of.
“Finally, take care of yourself. If you’ve been made redundant, you’re probably stressed and unhappy. Your mental health should be of topmost priority to help you survive a recession. Take a few days off to rest and make a plan for your future. Don’t put too much pressure on yourself. Go out, exercise, and relax.”
Sara Williams from Debt Camel has a great post with some more excellent tips on the 4 steps to take if you are redundant, particularly if you have debt.
Move back home
Jeff Clark suggests looking at your housing options:
“Currently renting but have the option to move in with family? Take it and drastically reduce your outgoings.
“For those working from home for the foreseeable future, giving up a flat or house share can allow you to build up savings and take advantage of any dip in property prices to get on the ladder. For those without a job it can take the pressure off, allowing you to build your skills and be in a better position to find the right job.
“Moving back in with family carries a stigma, but don’t see it as a sign of failure. It can be a smart strategic move to put you in a much better long-term position.”
Save
Claire Roach Likes to be prepared with a contingency fund. She says,
“When COVID hit and our household self-employment income plummeted, I was so lucky that I already had an emergency savings pot as a back-up. I would urge anyone to make sure they have some savings in the event of redundancy or sudden loss of income.”
Collette Jones agrees that it is important to start building an emergency fund to cover any unexpected costs.
“If you’re in a position to do so look at your lifestyle habits and outgoings. Consider things like do you really need a car or could you sell it? Are there any items around your home you could also sell? Do you need the most expensive TV package? Are you ordering takeaways when you could cook at home?
“Sitting down and going through previous bank statements and planning out a new budget can really help you look at where you can save money and cut back during this difficult time.”
Budget
Another blogger who likes to budget is Tuppenny’s Fireplace:
“Surviving a recession is hard, but definitely doable. If redundancy is looming but hasn’t happened yet, chuck the normal budget out of the window and create a survival budget. You do this by working out the absolute minimum you need to survive on. I’m talking no luxuries and a very basic meal plan.
“Live on this budget until and after redundancy. It’s not forever but a survival budget can halve your monthly expenditure.
“Take a little time to reassess your life’s priorities. Being made redundant can be the opportunity to change your life, for the better, perhaps to do something completely different. Embrace the opportunity.
“Ensure you have an emergency fund which you only use for absolute emergencies (redundancy payment can fill this up) and if there is time, pay off as much debt as possible before being made redundant by living on that oh so useful survival budget.”
Dan at the Financial Wilderness has reviewed a budgeting app called Money Dashboard Neon that you might find helpful here.
Develop side hustles
Many of the UK Money Bloggers community are experts at making extra money. This can really help you to survive a recession.
Pete Chatfield says, “Look at ways of making an extra income on the side. From mystery shopping, surveys, transcription to website testing, you can easily earn several hundred pounds extra each month without any specialist knowledge. This can help you until you get back on your feet.”
Mark Furniss agrees. He says,
“Once you have done the basic stuff – like cancelling subscriptions, looking at your outgoings and seeing if you can reduce them or save money by switching providers, shopping around, etc the next thing I would do is to see how and where you can make some quick money.
1 – Use a cashback site for any purchases online.
2 – Spend money on a credit card that rewards you and pay off the balance at the end of the month.
3- Sell stuff on eBay, Amazon, etc. It can be quite surprising the amount of stuff you have that is no longer required or you simply don’t want or use anymore.
4 – Rent out items you only use now and again on sites like Fat Llama.
“After doing some of the above to get some quick money, I would then look at my skillset and see if I can offer my services online in a number of ways. Ideas include online tutoring, creating designs and selling them on sites like Amazon, gear bubble, etc.
“If you are good with social media then you could look into this as a side hustle, and start working with bloggers and companies who want to outsource this work. There are literally hundreds of ways you can make money with your knowledge or skillset so do some research to see what you can do.
“Something else that can make some good money is flipping items you find at car boot sales and charity shops. I used to buy football shirts for £2 – £5 and sell them online for £15.
“If you don’t have money to buy products to flip another option would be drop shipping. You can start this for free and there are plenty of articles online walking you through the process. It’s not that difficult to start or run – in fact, my 7 year old son has just started his own drop shipping site.”
Look outside the box
Jennifer Graudenz also thinks you should look outside the box for work opportunities:
“In the current climate finding a job can be difficult. Therefore, it is a good time to look left and right away from the traditional career path. Lots of things can be done with low investment and provide an income, such as blogging.”
Kyle Kroeger says that, “…freelancing is a great way to survive if you get laid off.”
Staying positive
The importance of a good mindset came up several times amongst the money bloggers as a way to survive a recession.
Adam Stein advises:
“Stay positive, this could be an opportunity.
“Cut all unnecessary expenses & build an emergency fund if you don’t already have one. In particular, cancel subscriptions that not only waste money but, more importantly, waste time (Netflix box sets, etc). Use that time to improve your situation, be that reviewing your CV or applying for jobs.
“I recommend actively using any free time you have on any of a wide range of side hustles that will either make you money today or even possibly earn you a full time income in the future (blogs or YouTube channels, etc).
Kathy Cakebread also sees employment issues as a potential opportunity.
“If you’ve been furloughed or your hours have been cut, you may have a lot more time on your hands that you could use to make a bit of extra money.
“If you haven’t tried them yet, there are some fantastic money making apps that you can literally do when you have a spare moment.”
Use your spare room/driveway
Victoria Sully says to use what you already have.
“Start thinking outside the box for ways to make money. Got a spare room? Rent it out to a lodger and you can get the first £7500 tax free under the government’s rent a room scheme.
“In some cities there are websites to rent out your car if it’s not always being used or your car parking space if you live in a busy city. There are even websites to rent out tools and other equipment.
“Think about what you already have and how you can make money from renting it out. Any of these could be a great side hustle/side business alongside a job too.”
Network
Jo Yeomans offers great advice on using and building your network:
“I think one of the most important things you can do to survive the recession is to make connections, whether with old friends and colleagues or new ones. This helps to build an emotional support network and you may learn about opportunities that become available.
“My sister was rejected from multiple jobs she’s overqualified for (some had 200+ applicants!), but she eventually got one by reconnecting with an old colleague. Networking is more important than ever.”
Avoiding debt
Sejuty Chowdhury Tisha has this advice:
“Firstly, try to make sure you have a minimum of three months worth of expenses covered. This will avoid taking on any new debt , which can keep spiralling. Trying to pay off debt using cash savings isn’t ideal (unless the rate in debt is too high), as short term cash liquidity for paying rents/bills is more important.
“If you have any high interest debt, it would be prudent to refinance given rates are so low now.
“If you are made redundant, then your time will be best form of investment. For example, learning a new skill. These days social media (esp linkedin) is a great platform in putting one’s story out there for seeking jobs/new opportunity.
“Find healthy recipes to cook at home (rather than eating out) and innovate. This can be a family bonding exercise too.
“All in all, its also about the mindset as well: setting goals and being positive. Because even this will pass. Recessions are natural part of the business cycle, which helps the economy bounce back better – so no need to panic.”
Reduce your outgoings
As has been mentioned several times, reducing your outgoings is key if you want to survive a recession. Emma Jackson says:
“If you’ve been made redundant, it’s time to review your spending. Look at your monthly outgoings and try to reduce them. Consider switching to a cheaper energy, broadband and mobile provider, look at ways you can save money on your food shop, cancel any memberships that you don’t need and aim to minimise non-essential shopping (such as for clothes and luxuries).
See my money saving posts here and here for more ideas on how to reduce your outgoings. Meal planning and reducing food waste will also save a lot.
Develop your skills & use those you have
James Shackell says it is vital to invest in yourself:
“Learning new skills is THE most important factor for surviving and having a successful career in this ever-changing world. At the same time, the pandemic has not only legitimised online learning, but now it’s the primary source of education. You can also get much higher returns by investing in yourself than the stock market.
I did this video on the topic:
David from Money for Monday says it is important to look at your talents: “Take stock of your skills and experience. We often don’t stop to think about what we’ve done and where we’ve been, and find ways to monetise them. Whether that’s teaching people how to develop that skill through tutorials or offering a service utilising those skills, this is a good way to make money.”
Whatever your situation and the circumstances you are facing, I hope these ideas on how to survive a recession will be helpful to you. Please add your own in the comments below.
If you enjoyed this post, you might also like Live Debt Free on a Small Income.
Julia says
Great post with many good ideas.
As saving interest rates are so terrible at the moment, I’d also suggest any extra money goes towards paying off debt before saving it, as that interest rate is so much higher. The feeling of digging yourself out of that particular hole would be such a morale booster too.
Pam says
Thank you for this post. You must have worked hard to put all this information together.