Family Life
The stress of not finding work, and a loss of income, can lead to damaging inter-family relationships that can take years to mend. Sometimes families must borrow money from relatives or friends, which can result in tense situations.
Some families must change their plans, sell their homes, switch schools, and cancel vacations. In other households, there is even an unfortunate increase in child abuse cases.
Survival Strategies:
Families can work together to cope with the changes brought on by an economic downswing. In fact, a recession may positively impact a family as families tend to stay home together, and spend more time together.
Instead of eating out, take the family to a local park for an evening picnic or have a barbeque at home. Avoid hotels during a weekend trip in favor of free beach days. Instead of buying video games and electronic gadgets, take children out for walks and bike rides.
Look at the experience as an opportunity to spend more time with the children, and make the most of the time spent as a family.
Lifestyle Changes
Reduced income leads to reduced entertainment, dining, and extracurricular activity expenses. People cut back on extras during a recession, so many families must make drastic changes to their pre-recession lifestyle. This means fewer trips, shared experiences, and missed opportunities because of a lack of funds.
Survival Strategies:
The lifestyle changes brought about by a recession will include a period of adjustment. Families must allow themselves time to adapt, and understand that children may not fully understand the financial implications affecting the family. Talk with children about how things will change, and be realistic about expenditures and outcomes. It’s a great time to teach your kids about money management. (“Rich Dad Poor Dad” offers many ideas.)
Don’t build up expectations about what might change in the future. After a period of unemployment, belt-tightening may still be necessary as the impacts of unemployment can be far-reaching. Instead, focus on changes that need to happen now, and how the family can make the best of the situation.
Business Opportunities
Entrepreneurs may have a lack of funds available for borrowing or start new companies during a recession. Innovation often comes from the small business segment, but a lack of funding, coupled with a downturn in spending, may make small business owners nervous and unwilling to take big risks.
For unemployed entrepreneurs looking to start a new venture, this lack of funding can really hamper their chances of success.
Survival Strategies:
This is likely not the right time to start a new business, and the business idea may need to be put on hold. Continue to research new ideas, and look for investors or business partners, but focus efforts on earning an immediate income to support the family.
Real Estate Value
Many families depend on the value of their homes as part of their retirement plan. During a recession, however, real estate values fall drastically forcing many families out of their homes. Real estate can no longer be viewed as a safe investment during an economic downturn.
Survival Strategies:
Over time, real estate values may turn around, so families should try to maintain ownership of their homes if at all possible.
Homeowner may chose to rent out their homes in order to receive the necessary funds to cover their mortgages.
Some may also benefit by renting out a room in their homes to third parties.
Education
Without an income, people can’t pay for fancy nurseries and posh private schools, while the later on the other hand are trying to add extra expenses to their basic tuition fees in order to strengthen their revenues.
Many families cannot afford to send their children to school or college during a recession. Furthermore, the private education experience changes for many students who do attend, as institutions fill classes with too many students, or cut classes, majors, and staff, all while increasing tuition.
