Layoffs at major corporations have received a lot of media attention lately. Have you ever wondered why? The reason being most business leaders have begun taking steps to protect their companies from a recession.
This recession has had a significant impact on the job market and the financial stability of many individuals, especially Gen Z. It is a periodic cyclical phenomenon, and history demonstrates that recessions have frequently affected the world economy.
Recessions hit different age groups differently and Gen Z (those born between 1997 and 2012) face a significant part of it too given their unique situation in the market. Needless to say, the Gen-Z is entering the workforce during a time of incredible upheaval.
They are finishing college with the possibility of another recession as if a global pandemic and political unrest weren’t enough. While Gen-Zs who are just starting their careers may not necessarily have many assets to protect, they do have dreams and ambitions that need to be safeguarded.
With uncertain job prospects and economic instability, it can be easy to feel overwhelmed and anxious. However, there are some things that Gen Z can do to fight recession blues and come out on top. Here are a few things that you need to do and not do:
Save money: With the economic instability, it's important to save money whenever possible. Prioritise your spending and reduce unnecessary expenses. Make sure you have enough cash on hand to pay your essential needs including accommodation, food, transportation, personal items, and healthcare. You may spend within your means and yet save money for your financial objectives if you make a budget and stick to it.
Find ways to increase your income: Look for ways to increase your income, Freelancing or starting a side hustle can provide a steady source of income while you search for a full-time job. Look for platforms that offer opportunities to work on short-term projects and build your portfolio. Also start to invest early. A small start is a big start when it comes to investing. But always remember, markets owe you nothing.
Invest in yourself: While the job market may be uncertain, investing in education is always a wise decision. Pursuing higher education or learning new skills can make you more marketable and increase your chances of landing a job. It is one of the most effective strategies to boost your earning potential and accumulate wealth. Consider taking classes or obtaining qualifications that will help you stand out in the employment market. Keep in mind that investing in yourself is a long-term approach that will pay off in the long run.
Build an emergency fund: Having an emergency fund can help you avoid debt and financial stress in the event of unexpected expenses such as sudden medical bills. Begin by putting aside a tiny amount of money each month. Calculate your average monthly expenditure and find out how much you would need to sustain your family for at least 6–9 months in the absence of an income. Research where to park your money. Choose an avenue that has high liquidity and low risk. Your good old savings account, or FDs, are a good choice.
Don’t panic and give up: It's natural to feel anxious during uncertain times, but panicking won't solve anything. Stay calm and focused on finding solutions to the challenges you're facing. The job market may be tough, but don't give up on your career aspirations. Keep applying for jobs and seeking new opportunities. Besides, jobs become vulnerable during a recession, so it is advised for individuals who are currently working to carefully assess their possibilities before quitting a job.
Take on excessive debt: The biggest investment mistake you can make is borrowing money to invest. Making loan payments on time may be more challenging in the event of tough financial circumstances like shutdowns or layoffs. Since regular monthly obligations continue to exist even during a recession, borrowers may find themselves in a difficult situation if they take out a new loan only to find themselves unable to make payments in the event that they lose their jobs.
Give up on your long-term financial goals: Long-term goals are meant to provide results in the long term. Don’t fall prey to catastrophic news. The market is cyclical, and in the long run, you’ll have plenty of opportunities to sell high. In fact, if you buy when the markets are down, you might thank yourself later. Diversify your investments and be realistic about how much risk you can handle. Investments are supposed to provide you with a sense of financial security, not a sense of panic.
Neglect self-care: Taking care of your mental and physical health is essential during difficult times. Make time for self-care activities like exercise, meditation, or hobbies that help you relax and recharge. Besides, don’t isolate yourself. Stay connected with others, especially during challenging times. Reach out to friends, family, and colleagues for support and stay connected with your community.
With that said, it’s important to note that every individual's situation is unique and even when the economy is slowing down, you shouldn't panic. Instead, you should watch your expenditure carefully and avoid taking unwarranted risks. You may take a lot of proactive measures to better your circumstances and recession-proof your life, even in the midst of a severe economic crisis.
Having said that, it's crucial to remember that each person's position is different, so it's essential to speak with a financial counsellor to determine the best course of action for your particular case.
Girirajan Murugan is the CEO of FundsIndia