All of these could help you overcome a period of unemployment.
- Recent data reveals that many workers fear losing their jobs.
- You can prepare by increasing your savings and seeing if you can reduce your expenses.
- Taking on a side job and building your job skills can also help you keep your job during a recession.
For months, financial experts have been warning of a coming recession. And not surprisingly, many people worry about the possibility of being unemployed.
A recent Personal Capital report reveals that 61% of millennials are concerned about job loss and its potential impact on their finances. If you have similar concerns, it pays to take these important steps.
1. Boost your cash reserves
Many unemployed people learn the hard way that unemployment benefits do not fully replace their wages. And if you earn a living wage, you may find that unemployment benefits in your state only replace a small portion of your income.
This is why it is so important to have adequate cash reserves. The more money you have in savings, the easier it will be for you to meet your expenses if you find yourself out of work for a while.
Generally, it’s a good idea to have enough money in an emergency fund to cover three to six months of essential bills. If you haven’t reached the lower end of this range yet, try to inject as much money into savings as possible before economic conditions deteriorate.
2. Reduce your expenses
Getting rid of non-essential expenses won’t just make it easier to build up your savings. It could also make it easier to pay your bills if you lose your job.
Take a look at your current expenses and try to identify at least a few that you can reduce or even eliminate. If you’re spending $40 a month on a subscription box, for example, you might want to temporarily cancel it. Or, you might want to stop spending $150 a month on takeout when cooking those meals at home will only cost you $50.
3. Take a side hustle
Right now, the gig economy is booming. It is difficult to say whether this will remain the case if economic conditions deteriorate. But since side hustles are pretty easy to find these days, you might want to grab one, especially if your savings could be boosted.
Plus, if you establish yourself in a sideways hustle and a recession hits, you might have the option of continuing that second gig at a time when many people are losing their jobs. And if you’re laid off from your full-time job, your side hustle could serve as a backup source of income.
4. Develop your basic professional skills
The more valuable you are, the harder it will be to let you go. It’s a good time to reinforce skills essential to your job, whether it’s reading tax code changes or learning the latest design software.
If a recession hits over the next year, we can expect the number of unemployed to climb. Granted, our next recession could also be quite mild and short-lived. But it’s important to protect yourself against potential job loss, just in case.
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