How to Survive a Recession or Downturn

Financial experts define a recession as a sustained drop in economic activity that lasts more than a few months. Many financial gurus are predicting a recession or significant downturn in the economy within the next two years. Are you prepared to survive this financial storm?

In the face of economic downturns, surviving a recession requires strategic financial planning and a positive mindset. While recessions bring challenges like higher unemployment and reduced house prices, there are practical steps you can take to weather the storm.

Build Your Financial Cushion

  1. Create an Emergency Fund

    savingA solid rule of thumb is to have six months’ worth of living expenditures in your savings account. If you lose your work or your income drops, it will provide you with a financial cushion to prevent a crisis.

    To do this, start by setting up a separate savings account and regularly contribute to it. Consider having a portion of your paycheck automatically deposited into this account.

  2. Once you have built up a sufficient balance, you can use the money to cover unexpected expenses or as living expenses if you lose your job. See David’s explanation of the various funds.

  3. Invest Wisely
  4. Explore low-risk investment options like government bonds and blue-chip stocks. Mutual funds focusing on stability and growth are also viable choices. Consult with a financial advisor to make informed investment decisions.

    Just be aware that there is a significant cost for any mutual fund. David and I both prefer ETFs over mutual funds.

    If you have available cash in a downturn, it can be an excellent time to find high quality stocks at low prices. Use extreme caution buying stocks in a downturn, as even the most solid looking companies can crash and burn. Investing in stocks always carries the risk of losing some or all of your investment.

  5. Utilize Your Space
  6. If you have extra space at home, consider renting it out on platforms like Airbnb. This can help offset living costs and provide a unique opportunity to meet people from around the world.

  7. Cut Unnecessary Expenses
  8. cut cableDuring a recession, prioritize essential expenses like food and shelter. Trim costs by cutting cable TV, dining out, and vacations. Opt for cost-effective alternatives such as working from home or using public transportation instead of driving.

  9. Smart Grocery Shopping
  10. Save money on groceries by buying in bulk from wholesale stores. Plan meals in advance, focusing on non-perishable items like rice, beans, and other grains.

  11. Boost Your Income
  12. Explore additional income streams to make ends meet during tough times.

  13. Side Hustles
  14. Consider starting a side hustle such as dog walking or freelance writing. Platforms like Upwork and Freelancer offer opportunities to find freelance gigs.

  15. Gig Economy
  16. Leverage gig apps like Uber, DoorDash, and Instacart to earn extra money outside your regular job.

  17. Sell Unneeded Items
  18. Turn unused items like old clothes or shoes into cash. Sell them online or at local garage sales. Thrift store finds can also be flipped for profit on platforms like eBay or Facebook Marketplace.


In the face of economic uncertainty, adopting a frugal, practical approach can make a significant impact. By building a financial cushion, cutting unnecessary expenses, and exploring new income avenues, you can not only survive but thrive during a recession. Stay optimistic, stay strong, and remember: this, too, shall pass.

As always, I am not a qualified financial advisor. I just relate financial management to my own experience which may not resemble yours at all. Advice is frequently worth exactly what you paid for it. Most of mine came from expensive experiences.

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