by Simon Wright

Created on: January 30, 2008   Last Updated: March 18, 2009

There's no doubt about it. We are in a deep recession and most of the economic indicators are pretty grim. We're seeing falling house prices, plunging share prices and daily announcements of job losses. It's pretty scary and the chances are that we have either directly been affected or else know people who have been. Indeed, a recent Reuters article revealed that "the average Briton is 40,000 pounds worse off because of the credit crunch". This erosion of household wealth is, of course, not just limited to the UK; the economic malaise is a truly worldwide phenomenon.

Economists are predicting that the current recession will take time to turnaround and all major economies can expect to suffer pain as the worst effects of this downturn work themselves out. Amongst all this doom and gloom, however, are some ways to protect yourself and, for some, they may even be opportunities to boost your wealth.

Safeguarding your finances:

Your first priority is to safeguard your standard of living. For most of us, there are no gurantees that we won't lose our job bur we can arrange our finances to give us the best chance of riding out the worst effects of the recession. Firstly, financial advisers always recommend that people maintain a contingency savings fund, to help cope with any unexpected expenses. Normally, the recommendation is that people keep back three months worth of income. However, during this recession, if possible, you may find it prudent to build up a slightly larger fund. Secondly, you can take out insurance cover that will protect your income, should you not be able to work through either illness or redundancy. It may be worth speaking to a financial advisor to assess whether your current cover arrangements are sufficient, or whether you should be taking out criticial illness cover or redundancy cover.

The other step that you can take to protect yourself from the worst effects of the recession is to review your spending and cut out luxury or needless expenses. It may actually turn out to be the prod that you needed to review your finances and get them more into shape, which could have a big benefit in the longer term.

Wealth creation:

Whilst it's clear that protection against the recession is the priority, there are also some opportunities to actually make money during the recessionary period. It may seem odd to state that a recession can provide you with opportunities to boost your wealth but we'll explore those peculiarities in this article and what factors

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