Recession Soon? 4 Ways To Survive During Economic Downturns

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Recession. This word itself sends shivers down the spines of most people. It’s because, in this day and age, most of us depend on economic activities to make a living. Unlike olden times, when you could just hunt or grow your own food, the modern age requires paper money to ensure survival.

The good news is that markets have crashed before and the world has successfully emerged from previous recessions. Meaning that it’s not the end of the world. Even if a recession comes soon, it will end someday. So, be positive.

And that’s the whole point behind this article. Today, we will stay positive and discuss the four ways to take advantage of a recession. So, let’s dive into it.

What Exactly Is a Recession?

Even though we all know what a recession is, let’s just briefly discuss what it entails and the factors that can bring in a new recession.

Simply put, a recession involves a significant decrease in economic activity. If you’ve studied economics in school, you may already know how GDP and recession are related. Basically, if the GDP growth remains negative for two consecutive quarters, it’s fair to assume that a recession has started.

J.P. Morgan, the American multinational investment bank, has predicted a ‘mild’ recession next year. As mentioned earlier, this is another reason to remain positive. Their experts have predicted a small 0.5% contraction in the economy by Q4 of 2023. It may also drag all the way to 2024. This means that your daily life may be disrupted to a small extent. But rest assured, things aren’t as bad as many people are making them out to be. Now, there could be several reasons behind this recession.

First, the ongoing conflict between Russia and Ukraine has resulted in a lot of damage to the economy. Western countries cannot get directly involved in the conflict. So, massive economic and defense aids worth billions of dollars are the only options. Furthermore, the political tensions between the West and oil-producing nations have also resulted in high petrol prices. And finally, banks have increased their interest rates, which is putting more financial burden on the average person.

KEY TAKEAWAYS

Experts consider a negative GDP growth for two consecutive quarters as a recession. But there can be other factors at play too.
J.P. Morgan has predicted a small 0.5% contraction in the economy by Q4 of 2023. This may well continue into 2024, too.
To take advantage of a recession, you should manage money wisely. This can be done by tracking expenditures, creating a budget, and paying off debts as soon as you can.
You should try to spend money only on needs and avoid frivolous spending.
If you’re an expert in a particular line of work, you should consider freelancing. As an employee, you can only have one source of income. As a freelancer, you can diversify your income sources by having several clients.

4 Smart Ways to Survive a Recession

Now that you have some context around the current recession, let’s discuss what you can do as an individual to thrive in such an environment.

Here are the 4 ways to take advantage of a recession:

1. Differentiate between ‘needs’ and ‘wants’

The Guardian published a shocking article about overconsumption recently. They have mentioned that humans are using Earth’s resources almost twice as fast as our planet’s ability to replenish them. The reason behind this is not necessarily a higher population. Let’s take the U.S. as an example. The population is now 60% larger as compared to what it was 50 years ago. However, consumer spending has increased by 400%. There’s only one reason behind this: overconsumption.

In a recession, overconsumption can be detrimental to your pocket. That’s why you should learn how to differentiate between needs and wants. Needs are the things that are necessary for living a dignified life with comfort. This includes food, clothing, and shelter. Wants, on the other hand, are something that can give you mental satisfaction and a sense of accomplishment. For example, buying expensive shoes or eating at a fancy restaurant.

Let’s dig a little deeper and understand this concept with an infographic.

NEEDS	WANTS
Furniture	Unnecessary home decor items
Milk	Daily $5 coffee
Food	Eating at a restaurant
Basic clothes	Countless fashion items
A comfortable house	A huge mansions that requires a heavy loan

In a recession, you should learn how to only focus on needs and ignore the wants. Also, remember that a recession is something very temporary. It won’t be like this forever. You’ll be able to spend money as you please once the economy is back on track.

2. Manage money efficiently

A wise man once said that a penny saved is a penny earned. If you want to take advantage of the recession, you should save every single penny that you can. And then, use the extra money to pay off any debts you have. Don’t wait for the banks to increase interest rates. Forget about those $5 coffees and $20 brunches. If you have any liabilities, like an expensive car or a mortgage on a second home, think about managing them.

Here are some other ways to manage money well:

Track your spending: You don’t have to be an accountant to do this. Simply create a spreadsheet and keep tabs on your monthly expenditure. By doing this, you can measure how much money you’re spending and where you’re spending it. After you learn your spending pattern, you’ll be in a position to spend money more wisely.
Create a budget: This is the next step you can take after you have tracked your spending for a while. So, if you’re spending too much on takeaway food, create a budget around it (for example, $100/week). If the gym is costing a lot, find a cheaper one or exercise in a park. It’s small expenses like these that can make a lot of difference. So, create a budget for every category and don’t spend a dollar more than the designated budget.
Pay off your debt: As we’ve already discussed, having debts in a recession is not a good idea. So, talk to a financial planner if you have to, or ask a friend who’s good with money. But get rid of your debt as soon as you can.
Learn finance skills: The biggest problem with our education system is that it doesn’t always teach finance skills to kids. We all know Newton’s laws and Pythagoras’ theorem, but we don’t know basic accounting, investment, the stock market, tax regulations, and budgeting. Let this recession motivate you to be more money-savvy. If you have to, take a course and learn what they didn’t teach you. And this takes us to the next point, which is…

3. Take courses and develop new skills

They say we learn as we make mistakes. Well, during a recession, we learn because of the mistakes of others—you know, the bureaucrats, politicians, bankers, investors, and God knows who. However, it’s essential that you stay motivated in a recession and learn new skills to strengthen your financial position.

In order to take advantage of a recession, you could take some online courses or develop new skills. These courses could be finance-related or some other passion that you may have. The idea is to keep upskilling yourself and make yourself more employable. There are plenty of free courses on the internet that are created by credible sources.

However, if you’re in a position to spend a few extra bucks, you could take courses related to investment, side hustles, marketing, or something related to your career. Even though it will cost money, consider it an investment that will pay for itself in the future.

For instance, if you’re a consultant or aspiring to be one, you could check out Consultport Academy. It offers many courses that will teach you top-notch consulting skills. You can learn about topics like business and corporate strategy, consulting frameworks, and both consulting fit and case interviews.

4. Create a new source of income through freelancing

According to Statista, the number of freelancers in the U.S. in 2022 was 70.4 million and is expected to rise to 90.1 by 2028. The research projects that more than half of the U.S. workforce by 2027 will consist of freelancers. The trend is similar across the rest of the developed world and many developing countries, too.

There are many reasons why people are getting into freelancing. For instance, many professionals who are sick of tight schedules and want more flexibility turn to freelancing. Furthermore, freelancing also gives you an opportunity to choose who you work with, when you work, and from where you work. And most importantly, you can earn more than your monthly salary if you play your cards right.

If you’re still on the fence about freelancing, let this recession teach you that the economy is unpredictable and you always need a plan B. In these times, relying only on one job is not a wise thing to do. And if you’ve decided to take the plunge and become a freelancer, we can help you with that—but only if you’re a talented and experienced consultant.

Here at Consultport, we connect freelance consultants with businesses that are actively looking for one. Many consultants in our talent pool have achieved great success with our platform. So, don’t waste time writing sales pitches and attending dozens of networking events. Let us find clients for you.

If you’re a consultant who has worked with top management firms, blue-chip companies, or renowned digital agencies, get in touch now.

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