How to stay afloat in a recession
Escalating fuel and food costs, together with those utility bill hikes – we’ve all been paying out more on basic living expenses in recent months.
And there doesn’t seem to be any financial bright spots – especially with the recent rise in the Bank of England base rate. Yes, it means interest on savings has gone up (slightly), but there are also increased mortgage costs. Economists are fretting about a recession.
@theipaper: “A recession is defined as a period of temporary economic decline during which trade and industrial activity are reduced.”
“The generally accepted definition of a recession in the UK is when gross domestic product (GDP) falls in two successive quarters.”
So, just how do you survive financially when times continue to get tougher and you’re either not in a position to ask for an increase in your salary or any increase you may have received is still outweighed by the rise in the cost of living?
Here are a few tips on how to make your money go further:
Start seriously paying down debts
Yes, paying off your debts may sound like a bad idea because surely, you’ll need all the money you have for day-to-day expenses. But making a practical plan to pay off your debt means cutting down how much you pay in interest every month. It also means that should the worst happen, i.e. the bank reduces your overdraft or your employers start cutting back on your hours, at least those debts won’t be quite as unmanageable because they’ll be lower (and so will the interest payments).
Live life more frugally
Learning to make do with less is a great way to save when your financial situation picks up – because you will already be used to trimming your food budget or entertaining at home rather than going out to a restaurant.
It also means that should times get really tough financially, you’ll be fine. This doesn’t mean that you have to cut back on the foods you love or the lifestyle you enjoy, but rather, that you have to make more conscious spending choices i.e. reducing the amount of money you spend without it having too much of an impact on how you live your life.
Cancelling TV subscriptions, using public transport rather than taking the car all the time, cutting back on your grocery bill by buying some own-brand labels – this all makes a difference in your monthly spend totals. Just make sure the cuts aren’t too extreme, otherwise you’ll start to feel deprived and it will become unsustainable in the long term.
Diversifying your income
Having several income streams helps because if one fails i.e. you lose a part-time job because of cutbacks, then you still have the other two incomes, meaning you should still be able to pay the bills. If you have a joint income then if your spouse works in a different sector, there’s some diversification right there.
A good way to earn extra income is to turn a hobby or favourite pastime into a money-spinner. Lots of craft lovers have achieved this by selling their wares on Etsy. But, if you have a spare room, you could rent that out or, if fluent in another language then perhaps offer tuition to private clients. Selling off anything you don’t want on online platforms such as Ebay and Vinted are a great way to bring in extra income without feeling as if you’re having to cut back.
Ask for a raise
As the saying goes, if you don’t ask, you don’t get. It might feel like a tricky conversation to have, but it could be worth talking to your employer to find out if there is any scope to increase your salary. You want to feel valued in your role and if you feel like you’re not receiving the industry standard or are finding it difficult to make ends meet, talk to your employer. They’re people too, with bills to pay and commitments to keep up with, so a good employer should be empathetic and be open to at least exploring ways in which they can help you weather a financially tough time.