EP.90 6 things to do in a recession

A recession is a significant decline in economic activity across a wide range of sectors and industries. Right now as I recorded this episode the UK is not currently in a recession. It’s not been forecasted by the Bank of England, but there is a lot of talk about it is likely based on what is going on with consumers. 

A recession usually lasts for a prolonged period, typically six months or more. 

They can have a significant impact on our lives, both financially and emotionally and during a recession, it is important to be proactive and take steps to protect your finances. 

Here are six things you can do in a recession: 

1- Build up your emergency fund to cover at least three months of essential outgoings. Make a budget and stick to it.     

2- If you have debt, consider consolidating your debts into one lower-interest loan

3- Review your investment portfolio and consider selling any non-essential assets.

4- Look at your mortgage

5- Check your insurance to make sure you are adequately covered against things like sickness, unemployment, and accidents.

 6. Review your pension and make sure you are on track to meet your retirement goals.

Taking these steps will help you weather the financial impact of a recession and protect your finances.

 Emergency Money

I talk to clients about these 6 key areas all the time and I don’t invest their money without considering what we need to ring-fence for their emergency money. Everyone’s emergency pool will be different with some people thinking they need three, four, five, or even six times their outgoings per month. There are even people who feel they need ten times that and of course, it does depend on your circumstances and your attitude to how safe things feel at the time. 

 So how do we make decisions?

We can make some of these decisions when things are great and everything is brilliant. However, it is worth looking at your outgoings and looking at what you’ve got for an emergency now, so you can see how accurate it is. Check to see if things have changed. Your mortgage payments might have changed and your gas and electric payments too. So the need to spend more is natural because things are costing more. Reviewing your budget, therefore, is essential and a smart move to make right now even if things aren’t going great with your finances. 

If this is something you feel you would like to explore more on, then go and check out the other podcasts that have been released recently in particular the 4 weeks of financial detox episodes which dive more into these areas and will be helpful you can find them here: 

Why is having emergency funds so important? 


You don’t know what is around the corner. The unexpected can happen and getting yourself prepared as much as possible in advance to help you through any emergencies is going to help you. Let us consider for a moment the idea of you losing your job unexpectedly. The number of clients that you have coming into your business reduces. Perhaps the revenue of your business changes and this will impact your business. Do you know how it might be? Then when you consider your outgoings do you know how much you are paying out and are there any areas where you can cut back and adjust? Knowing where you can exceed and cut back on is crucial to better future-proof your financial future. 

 Not everyone will have a lot of wiggle room, living month to month, you might have already been experiencing a few difficult months and finding yourself using your emergency fund, and it’s running low. At this point, you find yourself in a situation where you are thinking, ‘Okay, well, I need to make some more cutbacks.’ This is why understanding your finances and keeping your head above water, remaining calm and positive is the biggest advice I can give in all of this. 

 I understand that it is easier said than done. I have been there and as I write this I do so from experience. I know that the only way forward is thinking positively and keeping yourself open to all opportunities whilst thinking ahead. 

 Reducing Debt

Check what you have on your credit cards, and ask yourself where you could overpay. You don’t want to be taking money out of your emergency fund. Only consider this as an option if you have wiggle room and over and above in your emergency funds. It would be more sensible to consider this if you are in that place. 

 If you know that you’ve got a credit card that is maturing that you want to get down the interest rates. Or, you know that you’re not gonna pay more, and you might not get that onto another 0% credit card.

You might be wondering what you can do to reduce that debt a little bit. Could £1000 make all the difference? If you were to reduce your monthly outgoings you might be able to clear that debt. Some like to start with the most expensive debt first whereas others like to clear off the smaller ones first because it feels more effective and positively impacts their money mindset as there aren’t then as many pots to try and reduce and clear. 

Psychologically I agree that this might feel good. Yet financially speaking, the ones on a higher interest rate or a pending 0% coming up for renewal need to be the priority ones to clear down first. 

Making Money in a recession 


In a recession, it can make people with a huge amount of money richer because they are buying large amounts of property that are cheaper and they are investing in stocks as they have the spare capital to do so. The more money you have the more leverage you have, so now is not the time for everybody to just be sitting and waiting. The attitude of ‘i’ll just see what’s going to happen’ isn’t a strategy I would recommend. You can never time the market. 

What we do know and can refer to is the Bull and Bear market, which shows you the highs and lows of the markets. From looking at this we believe that we have already had one of our biggest drops this year. It’s been a quiet and turbulent year. Therefore now is not necessarily a time to come out of investing because we just don’t know when or if it’s going to peak. What we do know is that over time, ( by looking at a hundred years’ worth of data ) that it will bounce back up. 

The news and media play a massive part in avoiding the real facts because they are spinning stories that create fear and mean that more people will read them. Yet, that doesn’t mean that they are factual. So stepping away from the noise and drawing your focus and attention to the bigger picture is advised. Sometimes we have to take a bit of a risk, but it is not about taking risks with money that you can afford to lose. We have to do this very carefully and strategically which is why it’s best to get financial advice. 

Fix Your Mortgage. Interest rates have increased and we expect them to potentially go up again in this part of 2022. They could go back down again in the latter part of 2023 but how do you decide when is the best time? If you’ve taken out a five-year fixed rate at the highest peak of this point, we don’t know what that future is. You always take that bit of risk. I spoke to a client recently and she said, ‘I timed everything so badly. I try to time it and it always goes wrong. I bought my house and property prices dropped. I took a job and my old company made redundancies the next day. You know I always time it badly.’

 She went on to share how this has made her feel as though she doesn’t know what to do and sits still. In my opinion, indecision is not always the best strategy either. We have got to be more proactive and make an informed decision with the knowledge we have and if you don’t have all the knowledge needed to make a decision this is where it’s best to get independent financial advice about what rates are available to you and work out the calculations with that advisor as to what is best for you in the long term. 



Every individual will have different kinds of insurance that cover a multitude of things. From cat insurance to car insurance even horse insurance like me. The key is whatever insurance you have to know exactly what you are covered for and what those policies do for you. Look at your Life Cover for example, does it cover redundancy? These are important questions to ask and find out or get in place. 

 There is also sickness to think about, and knowing if your work doesn’t pay you very much sick cover what would happen in that case? These are goals that we look into when working with our clients and a great independent financial advisor can talk you through the different kinds of insurance, assess what you are paying for and what you need within your budget within your affordability. Oh and if you have policies in place don’t just cancel them to try to save money, that isn’t always a good idea as you would need to bear in mind that you might not be insurable if you pull out and try to take it back again and it could end up costing you more as your age may have increased. It’s not just about whether you have been sick or not. 


Investing over a long period will create a compound effect and increasing the monthly amounts in your pension is great for tax efficiency and the buying power each month that you are buying it. These markets make money in the pensions invested over a long period, twelve months, two, four, five, or ten years depending on how long you’ve got to retire which means that they will make a bounce back.

 Looking at your pensions and contributions is important. Pensions have been quite big news in the UK recently because the Bank of England bailed out certain bonds, and government gilts and now there is news of that affecting certain pensions which affecting defined benefit or final salary pensions that are government-backed which are highly invested in the bond market and the gilt market because they give a guaranteed amount of income in retirement. That is why the Bank of England had to buy that and buy those out over that period

 I don’t think there’s any long-term damage here. Although there’s news of one particular pension firm that might be in trouble. But otherwise, that seems to be averted. And so that doesn’t apply to every pension that’s out there. It’s only if you’ve got a final salary from an old scheme from years ago it might be affected. It’s doubtful and the normal pensions are just affected by the market changes as they normally are. The next six months are looking volatile. There’s nothing to hide there. However, it will bounce back, it’s just a case of when?

 In summary, the six things to do in case of and planning for a recession are:

Emergency funds, reduce debt, invest wisely ( which includes if you are a business owner ), and think about what you need to reserve back into your business. Ask yourself what you should be investing in right now because it is a good time to leverage your position and if you can fix your mortgage, look at your insurance. As a business owner, there are things you can take up with insurance similar to life insurance which pays out life cover so be sure to check out and find out more if that applies to you.  It’s similar to the death in service if you are employed but it is your business that pays for it which makes it tax efficient as well. Lastly, pensions which again for business owners, reduce your corporation tax, and any employee contributions. 

 If you need any financial advice around any of those subjects please do get in touch with our sponsor. I am the Director and Founder of Evolution Financial Planning and we will be happy to see how we can help if you are looking for a little bit of a roundup around your circumstances and need a little help with this. 

 We also have a free tool available called a Financial Well-being Assessment which is on the website – You can click the link here to take you right there.

 Once you fill that out you will get an email with a summary, things to consider and also a free chapter from my book which is about prioritising your finances. 

 I hope after reading this you are in the best position that you can be and can keep positive and keep your money management on top of your agenda so that you can put yourself in the best possible position that you can. 

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