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Preparing for Economic Hardship

© Jennifer Krausz

It has been extremely difficult to focus on writing or finances in the aftermath of Tuesday's horrific attacks on the United States. The thousands of missing people, now presumed to be casualties, and the prospect of war have made my family's finances seem insignificant.

But a week later, I have finally found a topic to write about which may be of help to some of my readers. It seems certain now that many more will suffer economic hard times as airlines, airplane manufacturers, and many other businesses lay off workers. Recession seems inevitable, although the effect of a defense buildup and wartime industries may offset any downturn.

Nevertheless, there are some things families can do to prepare for economic hard times, even when there isn't much time to prepare.

1) Fatten up your emergency fund. If you don't have cash on hand to cover three to six months' living expenses, do everything you can to get ahold of this cash. Sell off items you don't need or use, like extra furniture, appliances, jewelry, etc (nothing with sentimental value, of course). Have a yard sale. Don't eat out. Cut back on unnecessary groceries, like sweets or chips. Cut back on entertainment, like going to the movies or the theater. There are more ideas for raising cash in my article "Finding Extra Cash."

2) Hide your credit cards. You don't want to survive a layoff or other hardship by relying on your credit cards. It will just be so much harder to recover and get back on your feet again. Now is the time to make the committment to work 2 jobs, downgrade your lifestyle, or whatever it takes to make ends meet without the plastic.

3) Weigh your options. If you fear a layoff in the near future, start looking for new employment now. If job prospects are dim in your field, are there other skills you have that can get you another job? What about your spouse? Maybe it's time to switch roles and have the caretaker become the breadwinner for a while. Can you start working part time now while you wait to see what happens? In today's working world, there are options that most don't even consider. Think outside the box.

4) Don't forget government help. Besides unemployment, there are a variety of programs designed to help those with economic hardships: food stamps, job skills training, etc. Now it's true that toughing it out ourselves can make us stronger people, and more likely to be economically successful in the future. But as far as true hardships go, that's what government social programs are really designed for. There's no shame in admitting you need some help.

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