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Ten Recession-Busting Money Tips for Young Professionals

Over three million, six hundred thousand jobs have been lost since the recession started over a year ago. Three million, six hundred thousand. If you’re one of the three million, six hundred thousand, my heart goes out to you and I hope you’ll follow my friend Sarah [3] as she chronicles her battle against joblessness in Diary of a Firee [4]. If you still have your job and you haven’t started preparing for the possibility that you will lose it, start preparing. You have all the tools you need right now to fortify your finances so that, should you lose your job, you will be prepared for it.

These tips were tailored for young professionals but they can apply to anyone. They are focused less on family-related money saving ideas and more on the things individuals and couples tend to do, especially if they’re in the younger working demographic.

1. Eat out less.

As a young professional, one of the largest line items on my budget is eating out. Whether it’s a sit down restaurant for dinner or a quick stop at a fast food joint, eating out is almost always more expensive than cooking at home. At a time when you should be conserving funds, cutting back on this expense may be a quick and less painful way to save a few dollars. Another alternative is to cut back on dinners and go out for lunch instead, if possible, as lunch is often much cheaper than dinner.

2. Set a budget.

When I started working, I tracked my budget for a few months and then dropped it as I reached a nice balanced equilibrium. No matter how you cut it, I am like most young professionals and don’t have a budget. It’s very important now to keep close tabs on where your money is going because you want to plug as many leaks as possible. Boosting your emergency fund should be a primary focus and if you can plug a financial leak, something you’re spending money on but aren’t really sure what it’s on, it’ll take a huge weight off your shoulders.

3. Assess your fire-ability.

The biggest risk you face during a recession is that your company goes through a rough patch and they need to let you go. The best way to mitigate that is to make yourself indispensable and very visible to the people who make the firing decision. If you’re the only expert in something at your company and that expertise is valued, make sure they know about it. If you’re in charge of a critical part of the company, make sure they know about it. If you’re not doing anything important, now is the time to find something absolutely critical to do.

4. Polish up your resume.

Even the most integral employee can be fired (everyone is canned when a firm goes under!), so spend some time reviewing and updating your resume. Keeping your resume up to date, whether the times are good or bad and whether you’re looking for a job or not, is always a good idea because it’s easier to document your accomplishments as you complete them. The last thing you want to be doing is sending out an outdated resume in a panic because you’ve been given a pink slip.

5. Network with people in your industry.

I read a study somewhere that most people find jobs as a result of knowing someone in their future firm. When I switched jobs, I was referred to my new firm by an old coworker who had left a year before. While the referral didn’t get me the job, it got me past the automated resume drop on the website and into a room with an actual human being. Any job seeker will recognize that getting into that room is half the battle. With professional networking sites like LinkedIn [5] and social networking sites like Facebook [6] and Twitter [7], it’s become much easier to keep up with friends and colleagues.

6. Boost that emergency fund.

Your emergency fund is your reliable first line of defense against the unknown. With unknowns at an all time high in this recession, you’ll probably want to boost it by as much as you can while you can. It can protect you against unforeseen accidents, medical costs, job loss, and a myriad of financial maladies. My recommendation is that you put it in a high interest savings account [8] or even lock some away in certificates of deposit [9].

7. Identify your trimmables [10].

A trimmable is something that’s a want, rather than a need. You need a place to stay, but you don’t need cable television. You need a telephone but you don’t necessarily need 2000 minutes on your cell. Identify the expenses you have that are optional and consider cutting some of them. You don’t have to cut them, but identifying will help you in the future. Should you lose your job, you know exactly what you can cut and how much room you have. You can establish a “base” figure for how much your expenses must be each month.

8. Avoid binding contracts.

Since the future is uncertain, avoid signing any long term contracts for expensive things. This means no new cell phone service contracts or new cable television service contracts, etc. If you lose your job, you’ll want to be able to cut things out of your life without having to pay a ridiculous $150 early termination fee. Now’s not the time to be adding to your list of required expenses.

9. Avoid loans.

If you had your eye on a new car, you might want to wait a little while. You don’t want to be on the hook for a $300 car payment each month if there is a possibility that you’ll lose your job. While the government , and the auto dealers, would love for you to stimulate the economy and buy the vehicle, it’s not in your best interests to buy it right now. Wait a few months, save up a little more for the down payment, but don’t put yourself on the hook for a large monthly required payment. If you default on the loan, you’ll lose the car, your credit standing, and put yourself into a much deeper hole.

10. Don’t put your head in the sand.

This last one isn’t so much a money tip as it is a career and life tip. It’s very easy to see all the news reports about a recession, to see the stats on job losses, and to see the stock market fly and fall – only to ignore it and stick your head in the sand. It’s easy to say “I won’t get laid off” or “I’ll worry about it if it happens,” but that’s dangerous. You want to prepare now, while you still can, rather than scramble to adjust afterwards.

I hope these tips have been helpful, if you have any additional tips, please leave them in the comments!

(Photo: bobjagendorf [11])