In the money blogger and personal finance world, a scary word beginning with "R" is popping up more and more:
Recession.
It starts with a whisper, grows into a story and ends when it's too late.
Prompted by falling house prices, rising consumer debt and inflation, these whispers are bringing back bad memories from 2007/8.
1.3 million people lost their jobs then and no one wants to repeat of it. So how can you recession-proof your money?
How can you prepare to avoid the worst of it, if it happens? Here are five tips to help:
1. Cut Expensive Debt While You Can
If you have any debt which costs a lot, usually credit cards and personal loans, cut them while you can.
Debt grows faster with time and even if you're being smart and switching to 0% fees, you don't want to have that knocking on your door when you're out of a job.
There are two approaches: first is to attack the most expensive debt first. Second is called the Snowball method: attacking the smallest debt first, so you build psychological momentum and move on to the second biggest and so on.
Overdrafts should be considered expensive debt too. Many current accounts charge upwards of £90 a month for being overdrawn, regardless of the amount.
Start paying it back so you're in good shape to weather a storm.
2. Cut Your Biggest Costs
Most frugal bloggers advocate scrimping on the smallest things: your daily Starbucks latte, your gym membership, even your loo roll.
But aside from being mentally exhausting and boring, these won't help you prepare for the worst. Instead, you should focus on your biggest expenses.
For most people, this is your accommodation and travel. Whether that's your mortgage or your rent, look to reduce it. Speak to your bank about re-mortgaging and research if you can get a cheaper rate. If you're renting, it's always worth a quick search to see if you can get a similar place for less.
Do you live within 10km of your work? If so, switch to cycling. This is the average distance most people can cycle comfortably within one hour. Cycling will save you over £1,200 per year if you live in London and give a boost to your health and fitness too.
3. Get A Side Job
Recessions are bad for the economy, but they don't tend to affect you personally until you lose your job. Inflation may rise and property prices may fall, but nothing will hurt so much as your steady income vanishing all of a sudden.
Prevent this by getting a side job. Even it's just a few hours a week freelancing, or a little part time work elsewhere, it can really help just to have a foot in a second door.
Job Seeker's Allowance is £72.40 per week if you're over 25 years old. If that doesn't sound like much, it's not. Diversify your sources of income and reduce your risk to a recession.
4. Switch To Cheaper Alternatives Now
If I lose my job, I'll switch to cheaper alternatives... Psychology is a funny thing. We think future pain will hurt less than present pain. We happily imagine ourselves cutting our costs when trouble strikes, but doing it right now? No, no - it's too much trouble.
Switch to cheaper alternatives now. Explore discount supermarkets and brands with lower prices. Get used to home brands, reduced-to-clear yellow stickers, and attune yourself to use coupons and voucher codes.
This isn't to save money but to practice discomfort. Most people panic when they lose their jobs. They're used to spending a certain amount of money each week, and any reduction seems impossible and scary. You, however, will be prepared. You'll be able to get by on less, and even keep on saving.
5. Save Money Into Your Emergency Fund
How much money do you have saved? If you lost your income, how long would your savings last?
Try and get that number to 12 weeks at a minimum. For most people that's a few thousand pounds. If you're in debt, this may seem to be an insurmountable task which is why the first item on this list was cutting your debt.
The average length of time to find a new job during the 2007/8 recession was 10 weeks. That's 10 weeks without income. Build a buffer of cash that you can sit on and use when the time comes. Park it in a separate pot and do not spend it.
Building this pot of money is the best way to proof yourself against recession. It buys you time to find another job.
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Tom Church is co-founder of LatestDeals.co.uk, a money saving community.