by Natalia Jones

Created on: September 23, 2009

The word 'recession' is enough to give some people the hives, but there are ways to keep your head when all about you people seem to be losing theirs. The following tips will give you the edge on keeping your cool no matter how chaotic the economy gets.

1. Have a second source of income.

2. Don't stop investing.

3. Buy store brands.

4. Beef up your emergency fund.

5. Pay cash.

6. Pay down debt.

7. Dust off your resume.

Have a second source of income.

There is probably no other single piece of advice that will give you the sense of security that diversifying your income streams is able to provide. When you are not dependent on a the performance of a single company for your daily bread you can breathe a lot easier with the knowledge that you will at the very least be able to cover your basic expenses. Your second income stream should also ideally be something you enjoy doing as well. For instance if you are an artist, consider selling your art or if you like writing you can freelance for a writing site to bring in some extra cash.

Don't stop investing.

There is a tendency to pull to the sidelines when things get a little volatile in the financial markets but instead of coming to a complete stop, try diversifying your portfolio. There will always be wise investments to be made, the trick is to find them and then have the stomach to hold steady until the market settles.

Buy store brands.

You can save a bundle on your grocery bill and even on personal care items by using store brands and less heavily marketed names. In most instances there is not much difference in the quality of the product anyway so you may discover a change you can make permanently to save yourself some money.

Beef up your emergency fund.

An emergency fund is supposed to provide a cushion in the event that your situation takes a turn for the worse and you are without a main income stream. This fund ensures that you will be able to pay your bills and take care of your important commitments for a few months, so it is usually recommended that you save about three to six months salary in an easily accessible account.

Pay cash.

When you stop using credit cards you are better able to keep a handle on how much you spend. Research has shown that credit card users spend on average about 20% more than those who pay with cash. This is because using cash registers that your available balance is decreasing, whereas swiping a credit card with the flexibility to pay at a later date (albeit at a cost) leaves only a dull impression that you must be able to pay the cost of your item back. The built in sensitivity that accompanies paying in cash is great to heighten your awareness of your spending in tougher times.

Pay down debt.

Getting rid of debt obligations not only lessens your debt load and improves your credit rating, it also frees up cash that would have otherwise been dedicated to installments. This cash can now go to savings and earn interest instead of helping to slowly chip away at paying interest.

Dust off your resume.

It pays to be prepared. When you are operating in an uncertain environment the best you can do is take care of the things that are in your control. Resumes that are skill based do well because they highlight your flexibility and different companies can see how they would be able to harness your skills. Focus on the positives and keep your resume up-to-date and ready if you need to use it.

You may not be able to dictate the way things around you occur but you can certainly control your reaction to them and you can put things in place so that you and your family will be prepared for whatever comes your way.

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