- As the coronavirus continues to affect the stock market and the economy, some experts say we are heading towards a recession.
- Harvard Business School Online found that two out of every three people are not prepared for a recession.
- Patrick Mullane, the executive director of HarvardBusiness School Online, told Business Insider there are some steps everyone can take to be better prepared.
- Mullane advises to excel in your current role, to take advantage of online classes, to cut unnecessary expenses, and to think about a side hustle.
- Visit Business Insider’s homepage for more stories.
As the coronavirus continues to sweep across the globe, it’s disrupting industries from airlines to restaurants. Over the past couple of weeks, the stock market has taken hit after hit, signalling to some that a recession is on the horizon.
“The economic impact of the COVID-19 crisis is likely to be sharply felt,” Patrick Mullane, the executive director of Harvard Business School Online, told Business Insider. “A recession is formally defined as two quarters of negative GDP growth. It’s likely by that definition that we are heading for one. But it’s hard to tell how severe it will be or how long it will last.”
The Harvard Business School Online and City Square Associates surveyed 1,000 people to determine how prepared people are for the coming recession. Turns out, two out of every three people surveyed reported they are not prepared.
Business Insider spoke with Mullane about what people could do to better prepare for the decline. Here are five steps you should take right now while under quarantine so you’re better prepared for a recession.
If you’re still able to work, start focusing on excelling in your current role to avoid layoffs during a recession.
It’s easy to weather a recession if you are able to keep your job, and there are ways to ensure your job security before a recession even hits. Right now, some companies have transitioned to a work-from-home strategy. During this time, Harvard Business School Online says it’s important to “demonstrate your worth” and show that you’re a valuable member of the team no matter the environment you work in. In other words, make yourself irreplaceable and become an asset, and it may pay off when a recession hits.
If you can, start working towards a side hustle so you have a safety net in case of a layoff.
Side hustles are becoming more popular. In fact, 54% of people the Harvard Business School Online surveyed said they would consider starting a side gig. Since many people are stuck at home, they might have the time to strategize ways of turning a hobby into a business.
“Having a ‘plan B’ can give you peace of mind that no matter what happens you’ll have a source of income,” Mullane told Business Insider. “Driving for a ride-share service is something you can do in your spare time. I know digital marketers who consult after hours or on the weekend.”
The side businesses you develop during this time period could help you make ends meet during a recession, and it might even turn into a lucrative full-time endeavour.
Start learning new skills with online resources and consider furthering your education.
Since you’ll be spending a great deal of time at home, Mullane suggests learning a new skill that is marketable when you’re on a job search.
“I’m a huge advocate of staying educated. Recessions increase the pool of labour in the market. It gets harder and harder to stand out,” Mullane said. “Finishing degree work or augmenting a degree you already have with other, more discrete coursework can help give you a leg up in the labour market. And with the need for virtually all universities to move online because of COVID-19, taking an online option just became even more mainstream.”
Start cutting any unnecessary expenses.
Experts say people need six months’ worth of money saved in an account for emergencies, like a recession. However, Harvard Business School Online found that only 27% of people have an emergency fund. To be better prepared, you need to cut back on expenses, like shopping sprees, cable TV, and other purchases. If you’re quarantining because of the coronavirus, avoid online shopping and bulk buying unnecessary items. Mullane advises to “dramatically reduce spending and minimise or eliminate all but essential bills.” The money you save can then help build an emergency fund.
“Certainly conserving cash should be a priority, particularly for those who work in industries where remote work is not feasible,” Mullane said. “That said, don’t be silly and take everything you have and put it under your mattress. If the banking system completely fails and markets aren’t working, we’ve got much bigger issues and those greenbacks in your basement won’t matter a bit. Be conservative, but be sane.”
Start updating and refining your resume in case you lose your job.
Harvard Business School Online found that more than half of people do not have their resumes updated, and 21% are not ready to look for a job at a moment’s notice. However, in a recession, the unemployment rate typically skyrockets, as employers let their nonessential employees go to save money.
You should take this extra time at home to make sure your resume and LinkedIn profile are up-to-date, not only with your most recent positions but also with your marketable skills. If you are let go from your position, you will be ready to take on the job search much quicker.
“Remember that it’s always easier to find a job while you have a job,” Mullane said, “so if there is writing on the wall that things at your current employer might be heading in a direction that could put your job at risk, begin looking right away.”
- Read more:
- ROSENBERG: The 4 definitive indicators of recessions are screaming that a slowdown has already started
- Stock-market trends that have slid under the radar are confirming a recession signal that’s been 100% accurate for the past 50 years
- 12 clever ways to save money every day, according to financial experts
- I saved over $US285,000 in my 20s without ever making a budget thanks to a laughably easy strategy I use instead
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