Take steps toward a 'recession proof' life

12.01.08
By Timothy Jones

With the U.S. officially in recession, it's understandable to be concerned about the state of economy. A constant diet of dire economic headlines seems to be the perfect recipe for keeping the average person awake at night.

But, according to blogger Amy Fontinelle, there are many small things we can do to reduce the impact of a contracting economy on our personal finances. In an article on Yahoo! Finance, Fontinelle outlines a series of simple measures designed to "recession proof" our lives.

Number one is to resist the temptation to use up every last cent available and instead build an emergency fund for those unexpected events in life. A high-interest, Federal Deposit Insurance Corporation (FDIC)-insured account will not only keep its value in times of market turbulence but provide much-needed access to ready money in the event of the unforeseen - such as a job loss or salary cut.

She also advises people to develop alternative forms of income wherever possible. This needn't automatically involve a second job but could be as simple as selling personal effects via online auction houses such as eBay.

Similarly important is keeping a close eye on your credit score. Paying bills on time and maintaining a healthy margin of available credit on individual accounts will work to this end.

Looking to the long term and not being panicked by the sharp ups and downs of the immediate market can also help.

"So what if a drop in the market brings your investments down 15 percent? If you don't sell, you won't lose anything. The market is cyclical, and in the long run, you'll have plenty of opportunities to sell high," Fontinelle writes.

According to the National Bureau of Economic Research, the U.S. economy officially went into recession last December.

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