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How to Survive an Economic Meltdown

There is no shortage of bad news on the economy. Falling house prices, rising gas prices, rising unemployment and falling growth. Even on the most optimistic assessment the future prognosis is bleak. This recession has already caused hardship for those with risky mortgages; rising energy prices means everyone is being affected in some way. These are some tips to deal with the current economic downturn.

Be Flexible

An economic downturn can force us to change direction. Maybe we will lose our job or are faced with declining incomes. Unforced change is rarely welcome, but, if we can be flexible to changing circumstances we will be better able to deal with any new situation we find ourselves in. Flexibility is particularly important in today’s modern economy – full time jobs for life are far less common these days. These are some practical tips to increase our labour market flexibility.

Keep improving your skills. Look for opportunities to develop relevant skills – IT, foreign language, vocational qualifications. It is these extra qualifications which will help in job search and job retention.

Don’t have a fixed mindset. Just because you have had a 9 to 5 job for the past 10 years doesn’t mean this has to be your future. It is important to be open to new opportunities and job prospects, otherwise we unconsciously close off many avenues and income sources.

Be willing to travel. Any downturn is often focused in particular regions or sectors of the economy.

Look beyond your sector. Some sectors such as auto industry, estate agents, construction are being very badly hit in this recession. Don’t fight a losing battle, if your made unemployed in this area, it is better to seek work in different sectors. You could always consider opening a pawn shop – apparently business is booming there.

Be willing to work for yourself. Self employment is one of the fastest growth areas of employment. It involves more risk, but, also offers more opportunities.

Work Out A Strategy

Avoid a negative mindset and despairing about your situation. Never give up but remain hopeful; if you find yourself becoming depressed by your situation, try talking through your problems with a financial adviser or friend. Unemployment can be very stressful, make sure your relationships don’t suffer; if you talk honestly with your partner, it will help.

Be Valuable To Your Company

If your company is looking to make 10% of its employees redundant, make yourself indispensable. There are various things which can help minimize your prospects of redundancy.

Dress smart. This shows that you care. If you can’t be bothered to dress appropriately, the company will think that reflects your wider attitude.

Be cheerful and helpful. Simple but effective. If you are a good worker and get on with people, this will encourage firms to keep employing you. If you create problems and annoy other people, a recession may just be a good excuse to make you redundant.

Be incredibly useful. Look for ways to deal with the companies difficulties, rather than just exclaiming how hopeless the situation is.

Avoid Excessive Fear – The Media Exaggerates

There is no denying that the economy is doing badly; but, unless you put your all your lifesavings in subprime mortgage stocks, it’s not quite the end of the world. The media tends to exaggerate negative news; focusing on the most dramatic statistics. Comparisons with the great Depression are becoming common. But, things aren’t that bad (at least not yet…).

The point is to keep a sense of perspective; don’t become overburdened with fear about the state of the economy. It is a time of uncertainty and declining living standards, but in recessions the majority of people don’t lost their jobs, recessions don’t last for ever – life goes on.

Dealing With Debt

If you have a mountain of debt, remember it is important to not bury the problem in the hope it will go away. It won’t. Instead, talk with a financial adviser and try to work out a practical budget and plan.

Opportunities in Redundancy

Redundancy, especially for those over 40, can be a depressing event and it is easy to get caught up in the negative turn of events. But, if we remain flexible and retain a positive attitude, redundancy can create unexpected opportunities. By forcing us to take a new strategy, we may be able to pursue career paths that we previously never thought of. Consider using redundancy money to set up your dream business.

Dealing With Falling Incomes

The current recession is made worse by the rise in inflation, in particular rising energy and food prices. This is leaving many people with declining disposable incomes. The rise in gas prices is particularly causing consternation. Rather than bitterly complain and feeling sorry for yourself, try making adjustments to your spending patterns.

  • Look for alternative ways to get to work.
  • Consider cycling rather than driving.
  • Learn to drive more slowly and carefully.
  • Reduce unnecessary expenditure on frivolous items.
  • Don’t borrow to maintain old living standards. The US and UK has enough personal debt. Borrowing is not a long term option.

Don’t Spend Time Complaining

We could spend hours dissecting the errors of the government and complaining about rising prices, but, it isn’t going to improve our situation. We need to take practical action to deal with the situation we are in. Adaptability is a key to being happy in any situation.

Money Isn’t Everything

If we judge our living standards only by our financial well being, the recession will make us miserable. But, why should we place so much emphasis on material living standards? Rising gas prices is by itself not a reason to become miserable. There is more to life than the disposable income in our pocket. Make an effort to be content with what we have.

Do you have any advice for surviving an economic meltdown? Please share your thoughts in the comments below.

 

Tejvan Pettinger works as an Economics teacher at a school in Oxford. He regularly writes on economics issues for his blog Economic Essays. . You can subscribe here.