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It’s official: the UK (and many other countries around the world) are in a recession.
It probably doesn’t come as a surprise to you after the craziness of 2020 – but what does it actually mean?
The economy is like one big cycle, where it grows and shrinks periodically. As it grows, the people of the country, typically, benefit. However, when it shrinks, the people of the country can lose out.
When a recession is declared, that means the country’s economy has shrunk two quarters in a row (or six months in total), and is usually where the value of the goods and services we produce as a nation lose value.
So what does being in a recession actually mean for us all?
House prices can fall, unemployment levels typically increase, and those lucky enough to remain in employment may see opportunities to progress within their role put on the back burner. Taxes can increase to try and recoup losses, but government spending can decrease (and often, it’s the most vulnerable of those within society who are hit hardest).
However, the majority of this falls out of our control, which is why, when these’s such a huge increase in uncertainty around us, the best thing you can do today is take control over that which you can control.
So, what can you do today that will hopefully mean you’re not as affected by a recession as you could be?
Analyse your spending
You don’t need to cut down right now if you don’t want to – but you need to know where you can afford to cut down, should you need to in the future. Write out your monthly expenditure, and divide it up into ‘necessary’ and ‘wants’. Your necessary spending is the spending you can’t get rid of – think housing costs, car payments and bills.
Next up is your ‘wants’ – the things that bring joy to your life, but you don’t necessarily need them to survive.
Cut down where you can
I know I said you didn’t need to cut down right now in the section above, but if you can, do. It doesn’t have to be all your favourite things, but do you really need all of the streaming services you’re signed up to, or all of the subscription boxes you receive?
Likewise, can you make a few lifestyle swaps now, to save you money on your usual spending? Think substituting your usual supermarket for Aldi or Lidl, or going back to having date nights in the house. What about cooking up some Fakeaways (I’ll share my favourites with you soon) instead of your usual weekly takeaway?
These small changes can make a huge difference when it comes to your monthly outgoings.
Build up your Emergency Fund
I will always, ALWAYS, preach about the importance of an Emergency Fund – now more than ever!
It can be so tempting to only save whatever’s left at the end of the month, but that’s the least effective way of saving. Instead, you need to allocate an amount of your income to savings before you even start to think about spending whatever’s left.
Your Emergency Fund will then be there to catch you should you lose your job, have your working hours reduced, or any other eventuality that might crop up where you desperately need cash then and there.
Always check on cashback sites before making a purchase
I’ve said it in numerous posts before, but you must check TopCashback or Quidco before making any online purchase. Literally ANY online purchase. It will take you an extra five seconds tops, and I’ve made nearly £120 in cashback so far this year on purchases I was going to make anyway.
Make more money
I’m a big believer in having more than one source of income, to protect you if anything should happen to your 9-5 job.
Professional opinions tend to suggest the next couple of months will be the toughest in years, with mass job losses and large levels of unemployment, which is why the best time to start a side hustle (if you haven’t already), is NOW.
Download my list of 50 side hustles you can start today so you can protect yourself if the worst should happen.
Expand your skillset
I’ve always fancied mastering the art of Pinterest marketing, and whilst I’m lucky enough to still be currently living as though I’m in lockdown, it gives me plenty more hours in the day. If I lose my job, I’d like to be at the level where I have a new skill that I could monetise, should I need to.
Use this time to upskill yourself in an area you’ve always been interested in – Youtube is a great resource, or SkillShare or Udemy. Who knows, you might even emerge from this strange old time with a whole new career path in mind!
Hopefully none of these are even necessary over the next couple of months, but by preparing for the worst – or at least being mindful of it all – you’re only going to be doing yourself a huge favour in the long-run.
Is there anything else you think I should add to this list? Let me know in the comments, or on Instagram – I’d love to find out how you’re preparing!