You may have heard all the predictions that there is a recession on the way and it could make you nervous and you might worry if you will struggle with money or have to take out a loan. It is wise to firstly remember that predictions are not always right and that even if we do have a recession, things may not be that bad for you. It is good to think about what a recession actually is and what impact it might have on you and how you can protect against this.
What is a recession?
A recession is a term which describes the case when an economy has not grown for two consecutive quarters of a year. It is something that is measured by the government and can come about for a selection of reasons. It could be a financial crisis, a trade shock or general downturn which will cause spending to decrease. It is the decrease in spending which will cause the economy to shrink.
What impact might it have?
The government might choose to put in some measures to try stop the recession or to prevent it form getting worse including reducing taxes, increasing government spending or increasing the money supply. These could have impacts on households by making them a bit better off. However, households can be hit differently. A decline in business growth could lead to companies having to be forced to reduce their workforces and so some households could be hit by redundancy. It could also mean that salaries will not go up and so real wealth could decrease if prices continue to rise. Knock on effects could also lead to other things happening but it can be tricky to predict. It will depend on how long the recession lasts and whether just one or multiple countries are affected by it.
How can I protect against it?
Therefore, the things that you will need to protect against are redundancy and reduce wage growth. To protect against redundancy it can be wise to make sure that you are doing your job well, that you ensure your role is needed by making yourself really useful and that you are keen and enthusiastic. Although it is the role that is made redundant not the person, it will not hurt to make sure that you are always punctual and helpful as well, just to keep giving a good impression. Of course, there will still be a chance that you will be made redundant. This means that you need to think about what you could do to help this situation. Make sure that your CV is up to date so that it is ready to send out should you need to. Make sure that your skills are up to date as well. Although you may not want to pay out for formal training, you can still teach yourself a lot of things, from free online courses or books and this could be useful too.
Financially, you will want to protect yourself as well. Making sure that you maximise your savings can be very handy as it means that you will have some money to fall back on should you find that things are getting too expensive or you lose your job. It will also be helpful in getting you into good spending habits. This is because you will need to spend less in order to save some money. If you can get used to spending less, then if you really need to then you will already be used to it. It can be well worth comparing prices too and making sure you are not spending more than you need to. Again, this will help you form a useful habit, but it will also allow you to save more money.
If you think that you are likely to be made redundant, perhaps because the company that you work for are already struggling or the sector that you work in is, then perhaps you should start to look for another job and perhaps even find a new job right now. It is wise to be aware of what opportunities are available even if you do not actually change jobs right away. This will allow you to make sure that you have the right skills for the jobs that you want.
It can also be useful to familiarise yourself with websites where you can compare prices. You can compare lots of thinkg from loans such as these and insurance to food and toiletries. Using these will help you to make sure that you are buying the products that you need form the cheapest places. It should help you to be able to keep the costs of your spending down, which will help you save more in the short term and if you do get made redundant you will not be spending so much then, when you have less money available to do so.