The past couple of years have been anything but normal, and while many pandemic obstacles are now in the rearview mirror, students and graduates who are searching for a job in 2023 may be facing something new: a recession.
Experts say 2022's combination of geopolitical events, soaring inflation and the burst of the crypto and tech stock market bubbles has the makings of a recession soon down the line.
If you're new to the job market, the idea of weathering a recession can be ominous. But fortunately, there are things you can do now to set up your career and finances to be in a good place if a recession does happen.
1. Start an emergency fund.
No matter if you're still in college or just starting out in your career, contributing to an emergency fund is an important financial move to make ASAP. An emergency fund is just what it sounds like—a lump sum of money you can quickly access if needed.
What determines an "emergency" is subjective; in the case of a recession, an emergency fund could cover necessary expenses if you lose your job. According to the SHRM Research Institute's August 2022 Recession/Inflation Impact Research, 39 percent of employed respondents indicated that if they were no longer working or receiving pay, it would take less than or exactly one month before they couldn't financially meet their basic needs—a key reason to have an emergency fund. Down the line, an emergency fund could cover car or home repairs, medical expenses or other unexpected bills.
Experts recommend having up to six months' worth of expenses saved up for your emergency fund. To calculate this, take a look at how much you spend in an average month, and multiply it by six.
2. Network and create strong career connections.
There are so many benefits to having a strong career network. In fact, a LinkedIn survey shows almost 80 percent of people consider professional networking to be important to career success.
Maintaining strong connections with people in your field can help you find new opportunities before they're advertised, receive invaluable career advice, and support and polish your communication skills. And if you need to apply to new jobs, having solid references to speak to your work can help seal the deal. If you're a SHRM member, there are exclusive mentorship programs and events that can help connect you to other HR pros.
3. Create a budget.
After college, your cash flow will likely look a lot different than it did as a student—you may have to pay for rent, student loans, groceries and more. This makes post-graduation an ideal time to start a budget.
Simply put, a budget is a plan for your money. A good budgeting strategy to start with is the 50/30/20 rule: Dedicate 50 percent of your income to needs (such as rent, groceries or car payment), 30 percent to wants (such as takeout, shopping or concert tickets) and 20 percent to savings and debt repayment.
By following a budget, you'll be able to quickly pivot if a recession strikes and you need to cut costs—perhaps "wants" go down to 10 percent of your budget and you funnel that leftover money into savings.
4. Refresh your resume.
According to the SHRM Research Institute's Recession/Inflation Impact Research, 20 percent of workers worry they will lose their job if there is a recession. Even if you're not worried about job loss, it's always wise to have an updated resume on hand in case you need to apply for new jobs, set up informational interviews or quickly e-mail a new career connection you met while commuting on the train.
Successful resumes should highlight what makes you uniquely qualified and distinctive compared to other candidates. Why are people going to remember you? Why will people want to hire you? What is your unique value to a new employer?
To start, SHRM members can access student and recent graduate resume templates.
5. Pay off debt (and avoid new debts).
According to a Sallie Mae report, the average college student carries $1,183 in credit card debt. Because credit cards typically have high interest rates, paying them off ASAP—recession or no recession—should be a financial priority. Car loans, student loans and personal loans should then be tackled next.
Being debt-free will not only free up your money for other goals, such as that emergency fund, but it can also give you an invaluable sense of peace. When you aren't paying down debt each month, inflation on things like groceries or gas won't hurt as much.
And whether you have debt or not, avoid taking on new, large debts like booking a big vacation or buying a new car if you can, because you may need the money if you lose your regular paycheck down the line.
6. Get a side hustle or learn a new skill.
One way to prevent a potential layoff is to make yourself invaluable at work. By learning more skills or acquiring training in a new area, you can help secure your role at your current job and make yourself more marketable if a layoff does happen. SHRM's certifications, specialty credentials and educational programs are a great place to start learning valuable career skills.
Another route for getting some extra money is a side gig. Writing, tutoring, being a virtual assistant, even delivering food are all avenues to explore to increase your earning potential and can give you something to lean into if a job loss does occur.
Remember, recessions don't last forever. In recent history, the average length of a recession was 10 months. By preparing your finances and job prospects ahead of a possible economic downturn, you can bounce back quickly and confidently.