Last week, I was reading a concerning article over at Budgets Are Sexy where J Money was wondering if he was keeping his job until the end of the day. The company he is working for had some financials issues and there were management changes. Therefore, they were reviewing the whole structure. They apply their survival guide to recessions.

This is usually what happens when companies go through recession; they revise and restructure. They make sure to cut their budget in order to increase their cash flow so they can continue to operate. Greater companies don’t wait until they read that the recession has arrived in the newspaper to react. They have written down their survival guide to recession way before the business starts declining and they make the move before their industry gets hit.

This is how each individual should manage a recession; with a survival guide to recession. The best plans don’t have to be complicated. In fact, when things turn sour and you lose your job, you don’t need a 10 pages plan to get out of this mess; you need a quick and applicable solution. So here’s my survival guide to recession in a few easy steps:

  • Rule #1: Have accessible money. In a beautiful world, we would call it an emergency fund. Unfortunately, having $5,000-$10,000 stashed in a high yield savings account is not an easy task. This is why having a line of credit (that is not used!) could be a very interesting solution. If you have access to 5 to 10K in credit without having going to the bank in the middle of a recession (because they won’t lend you money if you just lose your job!) could be a good plan B. The last option would be to apply for a 0% APR balance transfer credit card to pay off your outstanding debts and buy additional time. They usually offer a 6 months to 12 months 0% APR so you have enough time to get another job.
  • Rule #2: Have an active network. Building and maintaining a good social network is a lot of work. However, it’s your best way to get another job back quickly. The more people you know, the more people they know, the more chances you have to fall on someone who is looking for a good employee in your field. When you are looking to survive a recession, you need to stick together with your friends and connection. Keep a good track of your “old friends” and colleagues. Send them an email once in a while, use LinkedIn or twitter to keep in touch. As most jobs are found through an individual’s connection, I think it’s worth it to keep your network alive.
  • Rule #3: Know what your next step is. If you never thought of losing your job tomorrow, you might be very surprised if you get an envelop on your desk this morning. About once a year, I think of what I am doing right now and what I would like to do in the future. I make a list of jobs I would like to do and look at the competences/diplomas required. If I don’t have them, I start working on it right away. Part-time school is an ideal solution to keep a good social network alive and get more tools to fight back recession.
  • Rule #4: Build a sideline to survive the recession. Having a small sideline that generates a few bucks per month could be enough to make you go through the recession. As we are talking about survival and not creating the next billionaire company, any sideline would do the job just fine. If I ever lose my job due to a recession tomorrow, I would still be able to rely on my savings and my blogs to survive for a few months.
  • Rule #5: Keep track of your expenses. What is the ultimate tool for your survival guide to recession? You budget excel spreadsheet! If you know where you money is going on a monthly basis, it will be easy for you to know where to cut down and how much you will get in your pocket if you have to find money for the end of the month. Surviving through a recession is not fun, but there are ways you can do it without leaving an arm and a leg behind!
  • Rule #6: Make a list of items to sell. If you don’t have much liquidity, you can always rely on some great items to sell on Ebay. While you won’t become rich and you will probably won’t get what your item really worth, you will still be able to survive the recession and gather enough money to pay for your rent at the end of the month.

Surviving to a recession is not fun

But it surely teach you a lot bout finance! Economic crunch survivors are always stronger and in a better position next time they face financial challenges. So make sure to get your survival guide to recession in place so you don’t lose everything after losing your job…



Mike, aka The Dividend Guy, authors The Dividend Guy Blog since 2010 and manages portfolios at Dividend Stocks Rock. He is a passionate investor.