It’s more important than ever to recession proof your finances. The best way to do so is to be as valuable and indispensable to your employer as much as possible. If you still get laid off afterwards, then that’s unfortunate. However, you gave it your best effort.
The bear market of 2022 scared a lot of people. Employees at Meta got instantly laid off without a minute’s thought. Meta laid off some employees who was working there for just nine days on the job. Nine days!! Imagine how he must’ve felt leaving his old employer behind.
Companies employ a last in first out model. Companies lay off the last ones who joined the firm. They haven’t even had a chance to prove themselves and employers would rather keep the ones who’ve proven themselves than the ones who haven’t.
The Fed spoiled us rotten with the free money era of the 2010 – 2021. The era of quantitative easing is now over. The era of quantitative tightening is here and it doesn’t show signs of letting up anytime soon. It’s more important than ever to recession proof your finances.
Everyone has a plan until bad things happen beyond their control. Too many people lost their livelihoods overnight in 2022. It doesn’t happen with warning. It just happens whenever the company is losing money. It’s best to prepare for the bad times through the good times.
It’s more crucial than ever.
Recession Proof Your Finances: 9 Ways to Do So
Below are the 9 best ways to recession proof your finances! I employ these steps myself to protect myself against potential downturns.
1) Make Yourself Indispensable to Your Employer
Now is not the time to ask your boss for extra time off or complain you’re working 10 hours/week more. Now is the time to say yes sir, may I have another sir and dig in to work. Your employer should like you and be happy that they’re investing in you.
The biggest advantage that I have right now is that I don’t have kids and a family. Therefore, I can plow my time onto my work without thinking about a family to take care of. I don’t mind putting in the extra hours per day because what was I going to do anyway?
Recession proofing your finances means making yourself valuable to your employer. I’m now looking for tangible ways to save my company money and I will continue to do so. My company may still lay me off by the end of it all but at least I gave it a good effort at the end of the day.
It’s not wasted time in my eyes.
2) Pad Up Your Emergency Fund
Many people actually invested their emergency fund through the 2020 – 2021 pandemic. They’ve done quite well for themselves but when 2022 came around, they had no answer. Their favorite stock they thought would never go belly up did and people were scrambling.
Now is the time to pad up your emergency savings fund because you never know if you’ll be next. You don’t control whether you’ll leave the company, either. It’s at the company’s option whether or not you’ll stay. An emergency fund may not get you to be the wealthiest.
But they will do a great job at preventing you from wipe out. Recession proof your finances by padding up your emergency fund, beefing up your savings, and doing everything to cut back on spending. It’s expensive to exist in the first place, with rent and food costs on the rise.
Saving money is a great way to prevent wipe out.
3) Build a Side Hustle
It is great to already have a side hustle in place before you got laid off. Whether we want to admit it or not, side hustles take years before it takes off. The ones that are worth doing, anyway. I currently put in 2 years of my time doing my side hustles on Twitter and this blog.
If I ever get laid off, I already have 2 years of legwork put in beforehand to try and make it work. I can’t imagine what I would’ve done if I didn’t have a side hustle to fall back on. It will take me another two years to get to where I am today. That’s a nightmare!
Recession proof your finances by starting a side hustle today. The best time to start a side hustle is when you already have a job. It’s more than possible to have a $100k job with a $50k side hustle. Multiple income streams is what gets you financial freedom.
When you already prepared for a layoff before you got laid off, you are in good shape.
4) Recession Proof Your Finances by Being Nice
No one wants to work with a jerk. The nicer you are, the better you will be in attracting people who want to help you. It costs nothing to be nice and yet, you can recession proof your finances by treating people with respect and kindness.
There are powerful CEOs and people who rise to the top. However, when it comes time to actually finding people to do business with them, they fall short. That’s the part that people don’t understand. People want to work with others who are kind and powerful.
Whether we like it or not, business is run by people. People who control the wealth, connections, and the money that you are seeking and wanting. My closest friends are some of the kindest people you will ever meet. And I have a great desire to do things for them if I’m ever in a position of power to do so.
Kindness goes a long way. Even if it doesn’t recession proof your life, it’s the right thing to do.
5) Spend Less Money
This one is the most obvious of all but the least of things people want to do. What’s shocking is that the savings rate during the great financial crisis of ’07-’09 was still low in the 7 – 9%. What! The worst financial crisis the world has ever seen… And we only saved in the single digits.
Recession proof your finances by spending less money. There’s a lot of money that we’re wasting throughout the weeks, months, and years. There’s no need to buy another shoe if you have 20 of them already. One friend of mine had a 100 shoe collection.
There was no way she could’ve wore them all throughout the year even if she tried to. Spending is one part of your budget that you control. That’s the greatest thing about personal finance. If you control how much you spend, then you can certainly spend less money.
This is one of my favorite ways to recession proof my finances.
6) Manage Career Expectations
When the world is falling apart, now is NOT the time to ask for a raise. If you ask for a raise when the company is struggling financially, you will be laughed out of the room. There are many people who scored double digit increases in salary during recessions, yes.
However, they are in the minority of the minority and unless your employer is one of those who actually made a lot of money during a recession, now is not the time to look for upward mobility opportunities. Life is all about knowing where you stand and what your position is.
Recession proof your money by managing your career expectations. I’m not planning on asking my boss for a raise or a promotion any time soon. The consumer sentiment is at an all time low and there’s no guarantee anybody will keep their jobs in the coming months.
Understand your position well. You don’t always have the upper hand.
7) Be Patient With Your Investments
The stock market is NOT for people who want to get rich quick. The stock market is for people who want to get rich eventually. Look at your investments over the long haul. Recession proof your money by looking at the long term instead of the short term.
There are many people who tried to get rich in the short term and got burned as a result. When you have the money to withstand and last through the downturns is when the real riches get made. Wealth is built in bear markets. The ones who panic sold feel the effects many months later.
Be patient with your investments because that’s what’s going to keep you afloat. The S&P 500 never had a losing 20-year record, ever. 100% win rate over any 20 year period in its entire history. When you have a long term outlook, you have the ability to make the real money down the road.
The long term investors are the true winners in the stock market.
8) Recession Proof Your Life by Stockpiling Cash
I’m stockpiling cash and battening down the hatches as much as I can. There’s no guarantee when a recession will end. Will the recession end? Yes. When will the recession end is another question. Cash will be the most valuable asset during a recession because it’s the lifeblood of your life.
Recession proof your finances by having cash on hand not just for your expenses. But for when you need to take advantage of opportunities down the road. The ones who sold during 2007-2009 financial crisis felt the most regret.
Some sold because they had to, not because they wanted to.
The ones who bought during the 2007-2009 financial crisis won the most out of that time. I’m saving every bonus, equity payment, and anything of the kind that I receive in the future. Patience is a trait that will be most rewarded down the road.
If the big opportunities don’t come down the line, then so be it. At least I protected myself through the worst case scenario.
9) Be Nimble
Continue to keep an eye out for opportunities. Recessions don’t just happen overnight. There’s going to be time leftover for you to shift careers or anything of the kind later down the road. Don’t make a hasty career decision. Be nimble and try to look for opportunities whenever you can.
Sometimes you’ll get lucky and opportunities will come knocking down your door. Other times, you will have to be proactive and look for them yourself. Recession proof your money by being nimble and ready to pounce on opportunities whenever you can.
When you get to the top, you can wait until the opportunities come to you. However, until you get to the top, you will have to be proactive and act on opportunities. No one ever hands you anything, you will have to earn everything on your own.
You have the sole power to get there.
Recession Proof Your Money and Life
Everything goes really well until it doesn’t. Whether we like it or not, recessions are a fact of life. They will happen and they will continue to happen. It doesn’t matter if you are at a company with unlimited resources like Microsoft or Google. They will still lay you off if they can’t make money.
Recession proof Microsoft laid off 1,000 employees in 2022. They have billions of billions of cash on their balance sheet. 1,000 employees wouldn’t even have made a dent in their cash balance. It doesn’t matter what company you’re at. If the company makes no money, then you will be replaced.
Recession proof your money and life even if you work at a good company. Even if you work at a profitable department. I was working in a profitable and revenue generating department. Then one day, the company announces they are selling that part of the business.
Everyone was set to be let go at the end of the year. That’s the scariest part of the story. Meanwhile, the company’s stock price continued to increase, even during a bear market of 2022. It doesn’t matter which department you are at. it doesn’t even matter if you are in a profitable department.
Recession proof your life because you can be let go at any second. No matter how much your boss likes you, no matter how much revenue you generate for the company, and certainly no matter how profitable your department is. You have to stay nimble and look out for yourself.
Because the company will certainly look out for their own interests.
9 Ways to Recession Proof Your Life: a Shortlist
- Make yourself indispensable to your employer
- Pad up your emergency fund
- Build a side hustle
- Recession proof your finances by being nice
- Spend less money
- Manage career expectations
- Be patient with your investments
- Recession proof your life by stockpiling cash
- Be nimble
