So, you are entering adulthood during a recession.
Recessions are not usually a great time to be leaving school and entering the workforce for the first time. College graduates who are in the labor market during recessions usually work at jobs that are less stable and pay less compared to jobs available in a strong economy. And, of course, new entrants to the workforce during a recession face stiff competition from workers who have been laid off, both young and old.
Past Effects of Recessions on Young Adults
There are a number of studies on the effects of entering adulthood during a recession. Most of these studies show that, overall, economic conditions during a recession have negative effects on people’s lives.
Economic recessions may result in lower wages, financial instability, and even unemployment. Recessions may also impact spending patterns, since individuals who lose their jobs may cut back on spending in order to compensate for lost income.
There is little question that recessions and higher rates of unemployment result in reduced economic opportunities for individuals and families. Education, private capital investments, and economic opportunities are likely to suffer during recessions, with lasting effects.
Let’s take a look at some of the conclusions from some of these research studies. The two studies referenced are linked below.
- People who graduate during a recession make less than their peers who graduated during a better economy, even decades later.
- Often, educational attainment level affects whether a person will have a recession-related earnings loss. For example, people who have less education or no college experience are more likely to have a recession-related earnings loss.
- Workers with lower levels of education suffer greater short-term losses in income, are temporarily dependent upon social safety nets, and continue to suffer a temporary rise in poverty when they enter the job market during recessions.
- During the depths of the Great Recession job market (2009-2011), unemployment rates among young workers (ages 16-24) were more than double the rates experienced among older workers (ages 25+).
- In the years following the entry of certain young adults into the labor market, those who had less than a bachelor’s degree who dropped out of school during a recession were more likely to be on welfare payments and covered by Medicaid and food assistance programs.
Despite these negative effects, there are ways that people can make the most of a recession in their lives.
How To Survive A Recession As a Young Adult
Now, assuming you are still reading this because you too are feeling the pinch of the recession, don’t despair just yet! You are not alone and there are many ways to make it through this tough time. Here are some tips on how to enter adulthood during a recession and come out thriving on the other side.
1. Get a solid education
This is one of the best ways to weather any economic storm. If you are already in college, make sure to get good grades and consider internships or Co-Ops to help you build your resume. If you are not in college, do not panic! There are many ways to get an education without going into debt. Trade schools, evening classes, and online courses are all great options.
Plus, a solid education doesn’t have to mean a four-year degree. There are a ton of online sources like Udemy, LinkedIn Learning, Coursera, and others that offer courses in everything from web development to business management.
Getting certifications from these sources is a fraction of the cost of collegiate institutions.
Some of these courses and trainings cost as little as $30.
Additionally, getting certifications in the field of your choice can help you land a job or get a promotion.
You have options, so don’t allow yourself to not pursue more education due to the recession.
2. Consider your career carefully
When it comes to entering adulthood during a recession, your career is incredibly important. Make sure you have a solid understanding of what you want to do and research your options. Look into industries that are recession-proof or that have a lot of growth potential. Also, think about what you are passionate about and whether there is a career in that area.
Employers are looking for employees with the skills and qualifications they need, no matter the economy. If you make sure you have the right skill set, you will be much more likely to land a job during a recession.
3. Focus on Stability
One of the best things you can do during a recession is to focus on stability. You want to have stability in your career, your finances, and your personal life. This can be difficult to achieve, but it is so important because those are the three main pillars of our lives.
4. Re-evaluate and Understand Your Work Benefits
In the U.S., many workers are entitled to certain benefits, such as paid vacation days, health insurance, and retirement savings. If you are employed, take the time to understand what benefits you are entitled to and how you can best take advantage of them.
Sometimes, you may not be able to take full advantage of your benefits right away, but don’t let that stop you from at least understanding what they are.
You should especially take note of your company’s unemployment guidelines and what you are entitled to if you are laid off.
3. Have an emergency fund
An emergency fund is a key part of entering adulthood during a recession. This fund is there to help you in case you lose your job or have unexpected expenses.
A good rule of thumb is to have three to six months of living expenses saved. This way, you will be able to cover your costs without resorting to debt or going into a deep financial hole.
I wrote an extensive article on how to create an emergency fund. I will link it here for you to read.
4. Save your money
It may not seem like it during a recession, but saving your money is one of the best ways to weather the storm. Start by automating your expenses so you don’t have to think about them as much. Then, start setting aside money each month into a savings account.
Entering adulthood during a recession can be tough, but it doesn’t have to be impossible. With a little determination and effort, you can make it through this tough time.
5. Live below your means
When you live below your means you are supporting the “future you”. You are making it easier for yourself to save money and stay out of debt. Additionally, you are practicing skills necessary to survive adulthood during a recession.
Some ways to live below your means include:
-Eating out less often
-Following a budget
-Making coffee at home
-Cutting back on entertainment and recreation expenses
Don’t be afraid to take a few extra steps to save money. It will be worth it in the long run.
How To Thrive During A Recession As a Young Adult
Now that we have covered our bases with surviving a recession as a young adult, let’s talk about how to thrive.
1. Don’t Be Afraid To Negotiate
When you are looking for a new job, it is important to remember that you have the power to negotiate. Many employers are willing to negotiate salaries, especially in fields where there is a lot of competition for positions. If you are offered a job that is lower than what you were hoping for, don’t be afraid to negotiate.
Closed mouths do not get fed.
2. Get involved in community service
I know this sounds weird but stick with me. You never know who you might meet or what opportunities might arise from getting involved in community service.
Plus, community service can also help you build new skills and experiences that can make you more attractive to potential employers.
It is a great way to network and build your skills. Not only will you be doing something good for others, but you will also learn new things and make valuable connections that could help elevate you later in life.
3. Use credit counseling and financial advisers
Even if you don’t have any major financial problems, it is always a good idea to get help from a credit counselor or financial adviser. They can help you make a budget, save money, and understand your financial options.
At the least, you want to educate yourself on financial basics so that you can make sound decisions about your money. This is especially important during a recession when there are more financial challenges.
4. Maximize Your Retirement Contributions
A recession usually means that the stock market is going to go down, which means that your 401(k) or IRA account may lose a lot of money. But as a young person you have time on your side. So, as some would say the stock market is on sale and it’s time to rack up.
Max out those contributions to your 401(k) or IRA accounts each year. That way, when the stock market goes up you will actually have a lot of money in your account.
Just remember, entering adulthood during a recession is not an automatic loss. There are things that you can do to make sure that you not only survive but thrive during this time.
I hope this article has been helpful. Thanks for reading!
Let us know how you plan to make it through the recession in the comments below!
Best of luck adulting!
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