Are You Prepared for What's Coming?
By now we know what's coming: a recession. And we know that recessions come and go as a normal feature of the way our economy has functioned in a fairly discernible pattern that has existed since the creation of the Federal Reserve in 1913.
Will the coming recession be of the run-of-the-mill variety, or something worse? No one can say for sure. But both possibilities do exist. If someone tells you not to worry about it, ignore them. There's no way for them to demonstrate that this recession will graze us like hurricane Dorian recently grazed us here in the Northeast. It could hit us square on, as Dorian did to the Bahamas with devastating effect.
Are you prepared either way?
Let's look at the mild case first. Is it really necessary to be prepared? Prudence dictates "Yes!" Consider a basic meaning of "prudence": the ability to to govern and discipline oneself by the use of reason. As we've seen, reason dictates that a recession is coming. And so prudence dictates we should be prepared.
If the recession is mild, simple preparation should suffice. It would consist of measures that, frankly, should already be in place if you're a responsible adult living in an uncertain world. We're talking about things like having sufficient reserves to carry you over in the case an emergency.
You should have, for example, an emergency reserve of money. We can't know what might be the amount right for you. Some sources say an adequate emergency reserve should cover 6 months worth of expenses. Some say you should have more if you're more highly compensated. Why? Even if you cut your expenses, it could take longer for you to find a job that pays more than one that pays less. It's as simple as that. But make up your mind as to what makes sense for you.
In addition, if you're an employee, it's always good practice to keep feelers out in the marketplace. Depending on your position, your set of skills, your industry, etc., you might consider contacting head hunters, or executive search firms, or simply check the various online job search or matching services that exist. However you do it, you should be in touch with other organizations to see if there are better opportunities out there. Even if you're not actively looking for a job, you could talk to people you know about your situation and ask for their opinion about prospects for the future and advice about where you might look to further your career. If people you know aren't the right go-to source, ask them if they know anyone who might be available to talk to. Just tell them what you're looking to do and brainstorm. I know nothing about software programming, but I do know several people who do this. If someone came to me looking to explore opportunities in the field, assuming the person were a decent, reliable sort, I'd have no problem making an introduction to my contacts. And I know they'd have no problem spending some time to provide insight and advice if asked.
Yes, it's hard to do this when you're working full time. For the longest time that was my excuse, when I was an employee. But I finally bit the bullet, got my resume in shape, and made contact, even though I had a demanding full-time job. It was well worth the effort and it helped me make great strides toward making the sort of money I needed to sufficiently support my family.
Frankly these are things you should have in place, recession or no recession. But with the prospects for a recession, they're absolutely necessary. If you're not on point yet, get cracking.
Now none of this guarantees you won't hit at least a speed bump if a recession arrives. You could lose your job in a flash if it's bad enough. Then again, you could lose your job in a flash under a lot of other scenarios having nothing to do with a recession.
If we're lucky, the next recession will be relatively mild. And if the worst that happens is that you lose your job for a spell, count your blessings, especially if you've got some reserves and ready contacts to get the ball rolling to find a new job.
But what if it's not a mild recession? If that's the case, there's much more to consider and much more to do. We'll look at all of that next time.
Meanwhile, a reminder: While the suggestions here are quite basic, they're important. Even if you've got some reserves, take some time to be sure they're currently up to snuff. You may have had 6 months worth of savings 5 years ago that have now dwindled to 3 months. You may have an emergency like having to replace a roof on your house that eats into your reserves. Replenish if you need to. Don't get caught short. What we don't pay steady attention to has a way of getting away from us.
Will the coming recession be of the run-of-the-mill variety, or something worse? No one can say for sure. But both possibilities do exist. If someone tells you not to worry about it, ignore them. There's no way for them to demonstrate that this recession will graze us like hurricane Dorian recently grazed us here in the Northeast. It could hit us square on, as Dorian did to the Bahamas with devastating effect.
Are you prepared either way?
Let's look at the mild case first. Is it really necessary to be prepared? Prudence dictates "Yes!" Consider a basic meaning of "prudence": the ability to to govern and discipline oneself by the use of reason. As we've seen, reason dictates that a recession is coming. And so prudence dictates we should be prepared.
If the recession is mild, simple preparation should suffice. It would consist of measures that, frankly, should already be in place if you're a responsible adult living in an uncertain world. We're talking about things like having sufficient reserves to carry you over in the case an emergency.
You should have, for example, an emergency reserve of money. We can't know what might be the amount right for you. Some sources say an adequate emergency reserve should cover 6 months worth of expenses. Some say you should have more if you're more highly compensated. Why? Even if you cut your expenses, it could take longer for you to find a job that pays more than one that pays less. It's as simple as that. But make up your mind as to what makes sense for you.
In addition, if you're an employee, it's always good practice to keep feelers out in the marketplace. Depending on your position, your set of skills, your industry, etc., you might consider contacting head hunters, or executive search firms, or simply check the various online job search or matching services that exist. However you do it, you should be in touch with other organizations to see if there are better opportunities out there. Even if you're not actively looking for a job, you could talk to people you know about your situation and ask for their opinion about prospects for the future and advice about where you might look to further your career. If people you know aren't the right go-to source, ask them if they know anyone who might be available to talk to. Just tell them what you're looking to do and brainstorm. I know nothing about software programming, but I do know several people who do this. If someone came to me looking to explore opportunities in the field, assuming the person were a decent, reliable sort, I'd have no problem making an introduction to my contacts. And I know they'd have no problem spending some time to provide insight and advice if asked.
Yes, it's hard to do this when you're working full time. For the longest time that was my excuse, when I was an employee. But I finally bit the bullet, got my resume in shape, and made contact, even though I had a demanding full-time job. It was well worth the effort and it helped me make great strides toward making the sort of money I needed to sufficiently support my family.
Frankly these are things you should have in place, recession or no recession. But with the prospects for a recession, they're absolutely necessary. If you're not on point yet, get cracking.
Now none of this guarantees you won't hit at least a speed bump if a recession arrives. You could lose your job in a flash if it's bad enough. Then again, you could lose your job in a flash under a lot of other scenarios having nothing to do with a recession.
If we're lucky, the next recession will be relatively mild. And if the worst that happens is that you lose your job for a spell, count your blessings, especially if you've got some reserves and ready contacts to get the ball rolling to find a new job.
But what if it's not a mild recession? If that's the case, there's much more to consider and much more to do. We'll look at all of that next time.
Meanwhile, a reminder: While the suggestions here are quite basic, they're important. Even if you've got some reserves, take some time to be sure they're currently up to snuff. You may have had 6 months worth of savings 5 years ago that have now dwindled to 3 months. You may have an emergency like having to replace a roof on your house that eats into your reserves. Replenish if you need to. Don't get caught short. What we don't pay steady attention to has a way of getting away from us.
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