Recession Survival Guide: Keep Calm, Cut Costs, and Stay Confident

With economic uncertainty comes anxiety, especially with the big "R" thrown about by the media. Unfortunately, the mention of a recession brings a sense of instability even when not much has changed in your economic forecast.

I have learned through several job losses it is best not to panic and instead take action to prepare yourself if the worst does come. You and I can't control the economy; we can only control how we respond to any economic shift.

What are actionable strategies to help you stay calm, build resilience, and protect your financial health during tough economic times?

What Is a Recession?

A recession is a sustained period, often marked by two consecutive quarters, of significant decline in activity across the economy marked by falling GDP, rising unemployment, decreasing consumer spending, and lower business profits. A recession is a phase of slowdown that (like all things) will eventually end. 

The Great Recession

My family knows a little about the impact on a household’s economy during a recession. During the Great Recession, our dual-income family lost a job in the construction industry. After decades in business, the company shuttered its doors--not a single employee was spared. Within a day of this ending there was a new beginning, two little lines turned blue, and we were expecting our second child. We had just lost two-thirds of our household income. And did I mention that we recently moved closer to work and carried two mortgages? 

There were some sleepless nights, but then we became proactive and figured out how to survive in this new existence. Taking stock of what we had available to us (food in the pantry, money in savings, a network of friends and family, a job with some health benefits) and moving forward with a plan kept us afloat. Eventually, we moved out of state to keep things in ship shape (and we picked up a third mortgage on our way). None of this was easy (some of it wasn’t smart), and there were many sacrifices, but it was an adventure. I now remember the time with fond memories of living simply and more in tune with what is important. 

Don’t Panic

A good rule of thumb for most things in life is to remain calm; this includes during an economic crisis. Fear disrupts rational thinking. If you are panicking, you are not in a frame of mind to make sensible decisions. 

Runs on toilet paper in 2020--need I say more?! Overbuying or selling everything because the economic news is less than favorable can be a precarious option.

Still, ignoring or denying negative news does not serve you either. Understanding economic conditions or watching for a red flag could help you avoid calamity (like buying a second home when the home market conditions are crumbling--all fingers pointed at me for this one).

News outlets are known to exaggerate news because fear is a great hook. Clickbait, used by media and social media sources, blots out knowledgeable voices of reason. Could you curate your news consumption by seeking only reputable sources or limit your time listening to news sources or scrolling through social media?

When action displaces worry, it cannot stay put. Get busy. What can you do now to be proactive about potential market changes?

Assess Your Financial Situation (and Blessings)

When facing unemployment, a new baby, and two mortgages during a housing market crisis and recession, I listed what we did or did not have to combat my fear. Facing it head-on seemed to be the best plan.

We had one salaried income with benefits (*for me and my daughter) and a part-time job; we jumped back into it quickly. (*Pregnancy is considered a pre-existing condition, and it prevented my husband from receiving my health benefits after we lost his health insurance.)

We did have two mortgages to cover, but we had a roof over our heads. 

We did not have any credit card or car debt.

We had safe, running cars, and my husband could do minor repairs when necessary--our family could help us if substantial repairs were necessary. 

We did have some savings to keep us afloat but had emptied much of that account to buy a vehicle the month prior. (Did I mention we have impeccable timing!)

We did have a student loan debt, but I deferred payment until things looked up. (Looking back, I would have skipped this step until necessary.)

We did have a full pantry and freezer.

We did have hand-me-downs from my niece to help clothe our daughter for the next year (and I had kept a few baby items in case).

We did have vehicles and other items that we could sell if that became necessary.

We had friends and family that would help us if they could. And they did! (The part-time job is only one example.)

One house was for sale, and that gave me hope. (Unfortunately, things continued to get uglier, and so it sat. Eventually, we rented it at a $100 loss each month. I wouldn't suggest "paying someone" to live in your house, but on the books, it looked that way. We did not lose the house to foreclosure, and this was the goal.)

Create a Bare-Bone Budget

With my realty checklist, I began to run the numbers to see if we could manage on a bare-bone budget. (A bare-bone budget includes only the essentials--no extras! Bare-bone budgets don't work long-term like extreme diets don't, but they can work short-term.)  

A bare-bone budget can include:

Housing

• Rent or mortgage

• Basic utilities

• Essential home insurance or property taxes

  (It does not include streaming services or subscriptions.)

Food

• Basic groceries with a focus on affordable staples, like rice, beans, pasta, and frozen vegetables

(It does not include eating out, convenience food, or luxuries. Shop your fridge, freezer, and cabinets before going to the store. When shopping, find loss-leaders and sale items to cut costs.)

Transportation

• *Gas, public transit, or essential car expenses (insurance, minimum maintenance, etc.)

(*It does not include making short trips whenever it catches your fancy. Transportation is costly! Limiting driving and batching driving (grouping multiple errands) is key.)

Health Insurance

• Health insurance premiums

• Necessary medications or medical expenses

Minimum Debt Payments

• Minimum payments on credit cards, loans, and student debt to avoid penalties

Communication

• Basic cell phone or internet

Childcare or Dependent Care

• Bare minimum cost to care for *children or dependents

(*We found a less expensive home daycare option by asking around, and used childcare sparingly with our part-time work schedule.)

Pets

• Food

• Essential medications

(During economic downturns, the number of pets in shelters rises substantially as people have to give up their pets when they cannot afford their care. We had several pets during the recession and ensured we held onto these furry family members. They didn't have the fanciest food during this time, but we kept our family intact. No matter the economic situation, please spay or neuter your pet! If cost is a factor, reach out to a local shelter. They may have low-cost surgery days to support this need.)

Household Supplies

• Toilet paper, soap, cleaning supplies

(First, use up everything you have, including samples. Only buy as needed and buy generic when possible)

We lived on a bare-bones budget for four months. It didn’t feel like deprivation. Instead, it was a learning experience where I could experiment to see how much I could save, how creative I could get in the kitchen, and how much fun we could have at home with a dog, a few cats, a four-year-old, and some cousins visiting from time to time. The answer was it could be a whole lot of simple fun! 

Cut Expenses Even More

Trimming down a bare-bones budget may seem impossible when there is no fat, but cutting back is possible in some areas. Saving small amounts does not seem substantial, but when you use various hacks over time, they add up to savings that can give you some reprieve or help reduce debts.

Additional cut-backs can include:

Determining if you qualify for a hardship program (illness, job loss, etc.) by contacting your credit card company or student loan servicer

Lowering your utility usage (raise or lower the thermostat, use a small appliance instead of the oven, avoid phantom energy usage by shutting off items that draw power when not in use, etc.)

Canceling subscriptions you forgot about or don't use

Sharing rides, walking, or biking

Analyzing your receipts and finding holes, such as impulse purchases at the grocery store

Bartering or utilizing groups like Freecycle to acquire goods or services

Fixing an item instead of replacing it (I got very good at darning socks for a time and making simple clothing repairs.)

Getting your money's worth from a product (most bottles of products have more in them and can be salvaged with a liquid or by cutting the container open--toothpaste tends to have a lot left on further inspection).

You Can Thrive Through Uncertainty

Living through a recession doesn’t mean merely surviving. Instead, it can be a season of growth, creativity, and reconnection with what truly matters. Stay calm, plan, and focus on what you can control despite uncertainty. You will come out on the other side strengthened by new habits and a more resilient mindset. Economic downturns are temporary, but the lessons learned and gratitude gained can last a lifetime. I promise you’re more capable than you think.