Some Unsolicited Recession Survival Tips for Gen Z

Placeholder while loading article actions

Our economy is in a will-they-won’t relationship with the next big recession. The stock market is officially in bear territory (meaning stocks are down an average of 20% from their high). The Fed raised the benchmark interest rate by three quarters of a percent, the biggest increase since 1994. Inflation is felt everywhere, even when I have my latte. And there seems to be a wave of massive layoffs.

So “guess who’s back, back…” with some unsolicited advice for those who weren’t working during the last big recession. Every recession is unique, but tends to strike fear into our hearts, especially about job loss. During the Great Recession of 2008-2009, long-term unemployment (defined as 26 weeks or more) rose from around 20% to 45%, according to the National Bureau of Economic Research. This usually makes it harder for people to pay their bills, leading to consequences such as car repossessions, home foreclosures or evictions.

Before you panic, let’s talk about what you can do to prepare for a possible recession.

Although we technically experienced a recession in 2020, we have been quite distracted by the global pandemic. The moment we emerged from lockdown, the stock market stunned us with its recovery, we were ready to spend for revenge, and even the labor market had employees in positions of power.

The economic climate looks very different now.

One thing Gen Z can expect is a lot more uncertainty. This is partly explained by the fact that a recession will not be officially announced until we have already experienced one for several months. Historically, a recession was marked by two quarters of economic decline and usually determined by falling gross domestic product and rising unemployment. However, this is not a firm requirement.

Other indicators seep into the public consciousness before a recession becomes official. Inflation is one. Another is people who start to default on their loans. A noticeable decline in consumer spending is a big deal. Then, of course, there are the layoffs.

Job loss (or even securing a job in the first place) is one of the biggest concerns during a recession. It’s a feeling of vulnerability at any age, but it can be especially brutal for those in the early stages of their professional and financial establishment.

When the Great Recession hit, the oldest Millennials were 27 and many were just preparing to enter the workforce. Some 8.7 million nonfarm jobs were lost between early 2008 and 2010, according to the Bureau of Labor Statistics. And the labor market didn’t recover until May 2014, even though the NBER declared the end of the US recession in June 2009.

Millennials still bear the emotional and financial scars of the struggle to gain gainful employment. Although this is the most educated generation in history, our potential for long-term wealth has likely been seriously compromised as the recession has delayed the start of many careers. The whole side-hustle vibe wasn’t so much a desire as a need to cobble together a living wage.

It’s a lesson worth learning now: diversifying your sources of income can help you feel less vulnerable in a recession. (Don’t get caught up in a multi-level marketing system, which tends to gain traction in times of financial uncertainty.)

For those with a steady income, it’s wise to start building up those cash reserves. Especially if you are feeling the jolts in your industry.

One strategy I use is to establish a “baseline budget”. It’s a way for me to know the bare minimum that my household needs to live on each month. You cut out everything non-essential and focus on the cost of housing, utilities, transportation, pet/child care, medication, insurance premiums, monthly payments minimums and food. Knowing this number helps to know what I owe net after taxes.

You should also continue (or start) building an emergency savings fund. Take your base budget number and multiply it by the number of months you would want to cover if you lost your main source of income. Three to six months is often the rule of thumb, but keep in mind that it usually takes a few months to find a new job.

Another consideration is your broader social safety net. Take stock of the people in your network who can help you. Are there any family members or friends you can move in with or who could give you a short-term loan without compromising financially? Millennials living in their parents’ basements have become the cliché of our generation, but in reality, it made the most economical sense for many people.

How strong is your professional network for getting help finding a new job? Would you be eligible for unemployment if you lost your job or your main source of income? These are the questions to start thinking about.

Finally, don’t forget your mental and emotional health. Your basic budget may need to include therapy – which is essential for many and shouldn’t be put on the back burner until the economy as a whole stabilizes. If living with family members isn’t a healthy option for you, you can focus on other short-term financial goals (such as making retirement contributions or aggressively paying down debt) to channel money towards a viable living situation.

Recessions, like a pandemic, are scary and uncertain times. No economic downturn will exactly mirror its predecessor. All we can do is focus on what is within our control and prepare for what might happen.

This column does not necessarily reflect the opinion of the Editorial Board or of Bloomberg LP and its owners.

Erin Lowry is a Bloomberg Opinion columnist covering personal finance. She is the author of the three-part “Broke Millennial” series.

More stories like this are available at

Comments are closed.