In 1997-1999, there was a global recession that most of the people my age would not remember. We were still students then. So we didn’t care much, but our parents did.
About a decade later, 2007-2009, another global recession hit us. This time, some of us experienced it first hand. I did. I was forced to take 2 days of unpaid leave per week…which means 35-40% pay cut. It was difficult as I was barely able to survive. Still, I was more fortunate than few of my friends who lost their jobs completely and were unable to find a new job. But these few friends of mine, and myself, we were but a small group of Malaysians who have experienced the impact of a global recession.
Fortunately (or unfortunately?), Malaysia was not that heavily hit by the recession. So, most people still do not know the desperation that someone who is jobless can experience. To them, their jobs are safe, and they have the mindset “I won’t be affected by the recession”, or “Malaysia is safe from global recession”, or “My company cannot survive without me”.
And because of that, most people do not have any form of backup plan (surprised?). They have no contingency plan…no emergency fund…no proper skills which will make them highly sought after in the job market, etc. All they have is optimism that they will not lose their jobs, and the recession will not affect them.
Sad to say, recession WILL hit them whether they like it or not. It’s just a matter of WHEN and HOW. So if you are one of those optimistic people, perhaps the things below will help you.
How the recession might hit you:
- The prices of your daily needs go up. You need more money than usual to stay alive.
- Your customers stop buying products or services from you.
- Your multinational company decides to move the whole operation to a cheaper location, outside of the country.
- Your local company starts to lose customers and might be forced to close down.
- Your CEO decides to take the money and run, forcing the company to close down.
- Your spouse loses his/her job. Now you alone have to feed the whole family.
- Your income is reduced, and you do not have enough money to pay off the monthly debts.
- and the worst…you forgot you are jobless…and you are spending money like you are not!
So, before any of the above happens, what can you do to prepare yourself for recession?
- Prepare an emergency fund and put them in FD. Preferably 6 months of pay. So that you can survive for 6 months without a job. And don’t put your emergency fund in stocks, mutual funds, or any risky investment types. Just put them in FD. You might need them sooner than you expected. And you won’t want to sell off your stocks at a loss.
- Skill up! Make sure your skills are not obsolete. Attend courses, take up additional certs or learn a new skill yourself. These skills might prove to be valuable and might even help you fight off the competition if you were to find a new job during recession period.
- Be more proactive in your job. Take up tasks willingly especially if there are big projects involved. Prove yourself valuable to the company so that if there’s a plan to reduce headcount, you won’t be the first on the list.
- Learn more DIY stuff. So that in case something breaks and needs fixing, you know how to do it instead of paying people to fix it. I myself is pretty bad in this, but it’s something worth learning. You won’t want to have a leaking roof but not enough money to fix it.
- Don’t simply quit your job just because you’re frustrated, angry or disappointed. Think and plan properly before you make any quick decision.
- Ensure you have sufficient insurance coverage. This is not just for yourself, but for your loved ones as well. Just in case something bad happens to you or any of your assets (houses, cars, etc), you still have insurance coverage to help you and your loved ones out.
- Avoid over-indulging in lifestyle items. If you want, make sure you can afford them and by saying that, I don’t mean paying the bill via installment or flexi-payment. If you plan to buy a 5k item, pay it off at one go. It’s easier for you to estimate your budget that well. True, 5k if divided by 12 months, is only around $400+ per month. Not much. But if you are jobless, that $400 can mean a whole lot more.
- Always be mentally prepared that the recession might hit you and your family…hard.
Some of you might think that I’m a bit paranoid when it comes to recession and stuff. But trust me, being overly-prepared is better than not preparing for it at all. Because at the end of the day, those 5 things above will help you in one way or another even if there’s no recession….even though I hardly doubt so.
So, if you have not already done so, maybe it’s a good time to start preparing yourself for it.
All the best and hope this article helps.