Thursday, 5 September 2013

How do you handle a recession

Last night, I was catching up on the short documentary show 'Recession Heros' which I had missed the last couple of weeks. Fortunately, thanks to technology and XINMSN, you can actually watch it online, which is cool. After watching, it sets me thinking, are we ready for one?

Dow Jones and S&P 500 have not been able to hit new high and have been in  consolidating phase recently. It can go either way in coming months. Due to the recent correction, all regional indexes have also been down by more than 20%, and if it stays down with no signs of reversal, then the market might actually be in Bear zone. Thailand was also the first country in this region to have gone into recession since the major financial meltdown. Currencies have been behaving abnormally, most of the regional currencies(such as ringgit, baht, rupiah, rupees) have weakened alot against the USD.

With recessions, many jobs will be lost and how do you prepare for one if it comes. Actually the sad part is that most of us are not prepared for one until it hits us.

Honesty. Be honest about your layoff. Tell your closed ones, spouse, families including your children. By telling them, at least, you do not have to face the pressure of why not going to work after your layoff.

Severance package. For the lucky ones, if you have a severance package, do not spent it on an expensive vacation or buying an expensive gadget for yourself. Plan and use it carefully cause you do not know when the next job will come.

Budgeting. Discuss with your spouse on the family expense. Cut back on spending, determine what is need and what is want. The toughest part about this is telling your kids to cut back, no more eating in restaurants, visit to ice-cream cafe, buying of toys, etc.

Insurance. Ensure that your family(including your elderly parents) and yourself is covered with a comprehensive medishield plan. When one is down on luck, alot of other unfortunate things can come along. With medical covered, at least you dont have to worry about huge medical expense.

Reduce your debts. If it's so unfortunate that it is a prolong one, then look into cutting your debts, such as credit cards, property, car, etc.

Invest. Ideally, one should already have an investment portfolio before this happens. But most of us would not have one. If you manage to find the next job before finishing off your severance package, then you should make good use of the amount for investment in preparation for your next job lost. Yes, economics and jobs are very mobile now, and what you do now is to prepare you for your next job lost, sadly.

Hopefully my readers will not have to refer to this post during your work journey..

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