Flexibility > Money: Cushioning Yourself Against Economic Shocks

The Great Resignation saw over 38 million people quit their employment in 2021 and 2022, and this year is expected to see even more departures. A new dilemma has emerged for businesses due to the labor shortage: how to maximize job satisfaction to attract and retain employees beyond the facilities of ping pong tables and the occasional office party. However, recent studies demonstrate that workplace flexibility significantly influences retaining employees. During the pandemic, when it seemed as though burnout was unavoidable for most people, we saw a priority shift toward mental health and the importance of achieving a healthy work-life balance.

According to Forbes, a study of 2,202 workers conducted by Flexjobs reported that 25% of workers had left their jobs in the previous year, with 41% citing strict schedules as the cause. Another 30% of workers said they were already employed but wished to find another position.

“Employee satisfaction is about having options”

Thus, it appears that a lack of flexibility can be a deal-breaker when it comes to retaining employees. Almost 80% of those who reported having little flexibility in their schedules were considering looking for a new employment.

However, a recession also appears to be on the horizon for this year. A recession is defined as a period of economic contraction that spans two or more consecutive quarters of decreasing GDP. Despite reaching that point so early in 2022, the Dallas Federal Reserve data suggest we are not truly experiencing a recession.

As for where we are now, that’s not a simple thing to answer.

Since people’s disposable income is being drained by inflation that exceeds wage growth, the economy is contracting. Between September and November, wages rose by 6.4%, but it wasn’t enough to keep up with rising costs. Wages declined by 2.6% when inflation was taken into account.

We know for sure that these are unusual economic times and that there may be more difficult times ahead. And when times are tough, money is usually the first thing people look for as safety. Therefore cushioning yourself against economic shocks has become very important.

From the perspective of both a customer and an investor, cash appears to be a secure investment. In theory, that’s correct; if you keep your money in cash, your account value can’t abruptly drop. But if you count on cash too heavily, it could hinder your progress toward your long-term goals.

You can’t prevent economic shocks from occurring, but there are steps you can take to mitigate their impact on your finances.

How to Cushion Yourself Against A Recession

Whether or not a recession is on the horizon, it is always a good idea to prepare your finances for the unexpected. Increasing your savings, periodically reassessing your investments, and staying on top of your debts are all important possibilities to stay one step ahead of unforeseen occurrences. The following guidelines are here to help you always be financially prepared.

Contribute More Towards Your Emergency Fund

You should review your monthly budget to identify any unnecessary costs that can be eliminated. Are your purchasing expenditures excessive? Cut them out. Save money by only purchasing necessities. After you’ve minimized wasteful spending, you should put as much as you can into savings. The ideal allocation of your income should be 20% set aside for savings, with the remaining 30% going toward “extra” expenses such as memberships and subscriptions.

Reduce discretionary spending and increase your automated savings contributions to an emergency fund. You can rely on your emergency fund to help you get by in tough times, such as when you lose your job or experience other difficulties.

Pay Off The Debts With The Highest Interest Rates First

Pay more toward the obligation that has the highest interest rate first. While doing so, it can be beneficial to pay down tax-deductible debts such as student loans to receive a refund when filing taxes.

Assess the Investment Opportunities Available to You

You should avoid selling in a state of panic. Attempting to predict the market’s fluctuations is a very complicated task. If you are watching from the sidelines, you will miss out! Instead, it would help if you reevaluate your current financial status in light of your financial goals, time frame, and risk tolerance to choose the best course of action.

You should never make financial decisions based on how you feel, regardless of the performance of your investments. Those who can withstand a market downturn may benefit by holding onto their positions throughout subsequent recoveries. Get in touch with a reliable financial planner before making any major moves.

Expand Both Your Professional And Financial Horizons

During the early stages of the recession caused by the coronavirus, many service sector jobs disappeared. There is no way to predict which sector will be severely affected when the next economic crisis hits. The most important thing to remember is that if you possess a wide range of skills and talents, you’ll have more opportunities to earn money and will be better able to weather economic downturns.

Upskill! Utilize your employer’s benefits first. Many provide financial aid for higher education or funding for career advancement.

YouTube, LinkedIn courses, specialized guides, and online tests are just some free resources to boost your resume and portfolio. Put your best foot forward in meetings to demonstrate your worth to your potential employer. Including your diplomas and certifications on your resume will demonstrate your passion and commitment to further pursuing your education. Raising your skill level will boost your marketability and salary.

Think Creatively About Making Extra Money

Start working on a side project you’re passionate about, whether or not a recession is in the forecast. Consider a talent you’ve mastered and could utilize to generate passive revenue. Put the money you get from a side business into savings immediately for an extra financial cushion.

Attend In-Person And Virtual Networking Events

Attend monthly networking events to improve your online and in-person networking skills. Get together with other experts in your field to share what you know, pick up some tips, and make some valuable contacts. In the long run, these relationships could lead to beneficial employment possibilities or access to high-caliber corporate counsel.

Final Thoughts

Applying these sound financial practices will benefit your budget and increase your options regardless of the situation of the economy. If you want to save more money and be better prepared for the unexpected, you should keep careful financial records, make adjustments to your budget regularly, save up money in an emergency fund, and look for ways to enhance your livelihood. Developing sound money management skills will help you advance in your profession and boost your savings.

The bottom line is that everything comes down to individual preferences. Carefully consider your top priorities while you explore potential employers and positions. What are the most important things to you? Your goals? How do you plan to get there?

Studies have revealed that nearly half of all workers would rather have the option to work flexibly than receive a pay boost. One-third of workers would consider leaving their current employer in favor of one that offers flexible work elsewhere. Thus, the question becomes, which employer would you select if they both offered you the same work, but one provided you with more freedom to set your own hours and the other offered you a higher salary but with a strict schedule?