Staying Afloat during a recession

A glance at the Dow Jones Industrial Average can tell a disheartening story for even the most long-term, traditional investor. Year-to-date, many investors' savings have been diminished by the volatility in the markets. At the same time, unemployment rolls continue to rise in the wake of corporate restructuring. The key to remaining afloat during any economic downturn is to find ways to diversify income, as well as reducing your expenditures, ensuring that you can weather the recession and come out ahead when recovery is finally upon us.

Diversifying Your Income

Even if you have a seemingly secure job in today's market, taking steps to provide additional income streams will prepare you for future uncertainty. While you should remain focused on your primary job and perform tasks to the full extent of your capabilities, consider working on other projects during the weekends to bring in supplementary income.

The most effective way of generating supplemental income is to translate your skills and knowledge into a side business. For example, if you're an astute art collector, then you may want to consider carefully investing in art on the side or selling painting through auction formats. Be careful to consider the entry costs and always grow slowly, ensuring that you're profitable at each step of the process. Those involved in the service field can begin taking on clients for side projects, such as design that could potentially turn into a larger business over time. To keep your expenses low, work with open source business solutions such as Open Office and keep your overhead low; rather than advertising, use networking and word-of-mouth to help generate clients.

Keeping Expenses Low

No matter how stable your financial situation might seem, doing an audit of your family's expenses can reveal potential sources of savings. Sit down with your spouse and do a line-item review of your purchases over the last month and ask: "Can we replace this expense with a lower-cost, more effective solution?" In many cases, you'll identify sources of savings, ranging from purchasing generic brands at the grocery store to buying household supplies in bulk or utilizing coupons on existing purposes.

Many luxury purchases can be held off for the future, especially for items that aren't needed for everyday living. Instead, seek out smaller, more meaningful joys in life – if you were planning a vacation to Hawaii, then you might want to consider a smaller trip to the coast, where you can spend a few days on the beach relaxing. By making smart substitutions and adjusting your budget, you'll ensure that you can weather the economic storm and re-position yourself for long-term stability.

Elise Degrass writes about cell phones for cell phones.org

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