Although a recession is a temporary downturn, not all countries fully recover from it. And even if they do recover, a paradigm shift in wealth is likely to have occurred before it ended. Those who come out on top are those who go the extra mile to understand the peculiar terrain and flexible enough to adopt new strategies.
Simply put, a recession is a period of significant decline in a nation’s economic activities, lasting longer than a few months. Typically, a recession may last for 3 to 18 months.
Between 1960 and 2007, there were 122 completed recessions in 21 advanced economies. From the United States, Japan, Germany, Britain, Canada, Greece to Brazil, Venezuela, Ukraine, Finland, Iceland, Taiwan, Turkey, and now, Nigeria, many countries have been hit by an economic recession.
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Although a recession is a temporary downturn, not all countries fully recover from it. And even if they do recover, a paradigm shift in wealth is likely to have occurred before it ended.
Those who come out on top are those who go the extra mile to understand the peculiar terrain and flexible enough to adopt new strategies.
However, most people get so stuck in the melee of complaints that they are unable to think clearly and come up with ingenious solutions. You don’t have to be like them. You can be different.
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1. Adopt the Right Mindset
In any endeavour, the first step to success is having the right mindset.
You must understand that despite the difficulty a recession brings, it does not spell the end of life. It is a temporary setback that may prop you for a massive comeback, if you prepare diligently and wisely. Or don’t they say, where there is life, there is hope?
Having the right mindset is imperative to keep moving ahead.
2. Be Frugal
In times like this, intense frugality must be your watchword.
It is near-impossible to live without spending money, albeit how little. Therefore, the cut in your expenses must be done strategically.
By tracking your daily, weekly or monthly expenses, you’ll easily identify the high, low or mid-range, but irrelevant expenditures you can cut back on.
Also, a personal budget will come in handy to ensure personal accountability.
3. Call a Family Meeting
If you are the breadwinner of your family, you’ll do yourself good in ensuring that your dependants are on the same page with you: there must be a coercive approach to cut back on unnecessary expenses, both personally and in the home.
Such meetings should be held periodically, probably once in a month, to review the expenses of each member of the family and if need be, to re-strategize as the economy takes a new shape.
4. Forget Your Credit Card at Home
Forgetting something doesn’t have to be unintentional, especially when your forgetfulness is primal to your survival.
You should purposefully leave your credit or debit card at home. The reason behind this is obvious – we are less likely to experience the feeling of diminished wealth when we swipe a credit card, compared with when we pull out money from a wallet.
If you find it hard to resist the temptation of a credit card, you may drop it with a trusted friend or relative.
5. Carry Little Cash Around
Some people drop their credit cards at home but carry around a fat purse. You are likely to spend more money when you carry excess cash in your wallet.
If you really intend to cut costs, you’ll need to carry only money sufficient to take care of necessities and avert emergencies.
6. Stay Away From Malls, Bars, Resort Centres, etc.
There is no problem with having fun but, sometimes, prices have to been paid.
During a recession, it’ll be wise to avoid any event or activity that will take money out of your pocket without any return in profit.
Shopping malls, bars, cinemas and other fun centres pose a challenge to minimal spending. It is better to completely avoid a temptation than to fight it.
Instead of going to a Chinese restaurant, you can have a family picnic – and if there is no electricity supply, light a candle to create a romantic environment!
7. Hesitate Before Purchasing
If you really have to purchase an item, take a deep breath in and ask yourself: do I really need this? If I get this, how will it improve my life? If I don’t get it, what impact will its absence make on my life?
Sometimes, the sight and attraction of an item makes us overly enthusiastic to purchase it. It appeals to our ego and self-esteem.
So, when unsure about purchasing an item, it is advisable to leave the market or mall to mull over your choice for a few days. After a few days of contemplation, you’ll be convinced whether you really need the item or not.
8. Cut off Your Subscriptions
One way companies ensure a steady flow of predictable income is to create a product and have customers pay an amount of money on a regular basis to have continuous access to its use.
Telecommunication companies, Internet Service Providers, Pay Television, to mention a few, utilize this subscription model.
In order to cut down costs, you should discontinue any luxury subscription that isn’t essential to you or opt for a lower subscription. For instance, as an alternative to Pay Television, you can tell your children bedtime stories or read story books together.
9. Open a Savings Bank Account
If you don’t have a bank account, there is no better time to open one than now.
Also, if you have an account from which deductions are continuously made, perhaps a current account, you may consider transferring your money into a savings account.
It is advisable to have at least 6 months worth of your income tucked away in a savings account, especially in this unpredictable clime when market-value of the currency drops continuously and people are being relieved of their jobs.
This money will serve as an emergency fund to fall back on in the event of an unforeseen circumstance. Set a target for how much you will like to save over a certain period of time, and work towards it assiduously.
10. Adopt a Maintenance Culture
The wealthy are not necessarily those who have more money, but those who know how to manage the little they have.
You cannot afford to leave your possessions to wear or tear. You must use your possessions wisely so, they will be durable. A recession is not the time to spend incessantly but to save prudently.
Use the appropriate tools for the appropriate work; wear the appropriate shoes for the right terrain or weather; carefully handle your equipments and appliances, and when there is a little damage, quickly repair for a stitch in time saves nine.
11. Invest in Assets
A recession should not be a justification for not making wise investments – remember that wealth changes hands during recessions. In order to come out stronger, it is necessary not only to survive but to thrive.
Therefore, your aim should not lie in just cutting costs. If it does, you’ll either remain where you were at the start of the recession or a bit lower. Any extra cash should be invested in profitable ventures.
However, ensure you get sufficient educated information before investing your money in a sector of the economy in order to forestall a loss.
12. Live a Healthy Life
When asked what surprised him most about humanity, the Dalai Lama replied: “Man. Because he sacrifices his health in order to make money. Then he sacrifices money to recuperate his health.
And then he is so anxious about the future that he does not enjoy the present; the result being that he does not live in the present or future; he lives as if he is never going to die, and then dies having never really lived”.
Research has shown that households in developing nations a huge portion of their income on self-medication via pharmaceuticals.
Of course, you wouldn’t like to spend money buying pills when you have other expenses on your list. So, take good care of yourself by adopting a healthy lifestyle.
Recreate Your Life
The life we live today is a result of the choices we made yesterday; to change our lives, we must be ready to make different choices today. No one wishes for a recession, but when it comes, we must be ready to pay the price.
You cannot implement any of the above nuggets unless you are ready to forfeit comfort and luxury. To get a better view of the choices you have to make, weigh the option of temporary discomfort for longer comfort against continuous luxury at risk of a lifetime of penury.
Be creative and seek for ingenious way to have memorable experiences without having to break the bank. The advantage of a setback is that if forces us to look within and tap into our inner strength.
Coco Channel once said, “My life didn't please me so I created my life”. Having to pay huge sacrifices and live in a different way as a result of the recession may not be easy yet, if we are displeased with our current status, we can recreate the life we want.
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