How to Survive a Recession Economy

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by Jayaram V

Going by the way the world is progressing, you can expect to have at least three or four recessions in your life time. Present day world is so interconnected that recession in one part of the world effects the other parts. So even if the country in which live you is recession free, if there is recession going on in some developed country, expect that ripples of that will touch the shores of your country too.

Now when there is a recession what can you do? Recession, as you know is entirely beyond your control. You cannot determine its progress, but you can be sure that it is bound to impact your life and your future in numerous and very hurtful ways. Recession coupled with stockmarket crash can be more devastating especially for those who have retired or on the verge of retirement.

All people who are currently living in the USA are victims of a nasty recession whose end does not seem to be anywhere near. What caused the recession was greed and complancency. It is applaing but true that millions of people lost their jobs and savings becuase of the reckless investments made by some very top financial companies and their not so diligent executives who thought that they were dipping their hands into free money.

As a result, housing prices have stagnated in many states for the last ten years. The salaries have not risen in proportions to the rise in the prices of commodities or the decline in dollar value. While people's income in general went up greatly in countries like India and China, income levels in the USA went down actually. Many people now depend upon Government support to make their ends meet. Students and elders alike are suffering in this economy with no revival in sight.

In such a scenario, when things are not going well and a situation like recession is completely beyond your control, what can you do? How can you protect yourself from short term as well as long term effects. How can you ensure that you can provide your family and at the same time make plans for your retirement? Here are few common sense solutions to deal with recession at your individual level.

1. Make sure you protect your job. It means you have to stay competitive, keep learning, if necessary by going to school and  improving your job skills. Most importantly, you maintain good relations with your boss and other colleagues, people who matter in decision making and whose support is vital for your survival in the company. If you are not getting expected pay raise, do not complain. Keep working and wait for the right time to either ask for a raise or look for a new job.

2. Develop specialized skills in specific areas of your profession. You are lucky if you have specialized in a particular area which is vital to your company's operations. Specialization, in these days, is an insurance itself. If not, try to acquire skills in multiple areas and make yourself valuable and exceptional. Remember in a recession you cannot take your job for granted. The Companys in the present day world are so profit driven that they can spring a surprise on you any day. Many companies also use recession to get rid of deadwood. So make sure that you add value to the team in which you work.

3. Keep your base. If you are an independent professional, you have to find ways and means to retain your customers and go the extra mile to keep them satisfied. Since you may be forced to cut down on your professional fees, you may have to do extra marketing and secure newer customers. At the same time, you have to minimize your expense by eliminating all wasteful expenditure. If you have an office in an expensive area and its location is not that important for your business, you should consider alternatives. You may also need the help of a good financial and tax consultant to help you plug all the leaks and minimize your tax burden.

4. Save as much as possible. To the extent possible, save some money every month and invest it wisely in  your 401K and other tax exempted alternatives. Maintain a list of monthly expenses and explore ways and means to cut down the expenditure. Try to keep yourself in good health so that you can avoid unnecessary medical bills. Just keep one or two credit cards and discard the rest.  Negotiate better terms with your credit card company for lower interest rates and money back options for the purchases you make. Use coupons wherever possible to save on food and groceries. Avoid frequenting the hotels and restaurants and instead learn to enjoy home cooked food.

5. Choose your leaders wisely. Of course, your one vote will not make much difference. But in a democracy you have to play your role. A country cannot afford leaders who have grandiose plans and extravagant spending habits at the expense of public money. Consider whether your love for a particular politician or politicial party is more important than your retirement and the future of your children.

6. Help others by doing voluntary work. Help those who may be looking for a job or looking for moral support in difficult times. It will not only make you feel good, but also will help you in the long run to expand your network of connections.

7. Have faith in your destiny and in God. Trust that things will resolve themselves eventually and life will return to normal. Live with the conviction that suffering is an important part of human life and we can always learn from our mistakes and difficulties. A recession, such as the one we witnessed in the USA few years ago, shakes up everyone and makes them realize the importance of financial planning and the need for achieving positive net worth.

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