Over the weekend, the Miami Herald had an interesting piece on the changing attitudes of Gen Y workers who are dealing with the inevitable job cuts and pay reductions that come with a recession. After reading the article, I can't help but note how important it is for Gen Y's to understand and accept the fact that we are not invincible. As strange as that sounds, corporations who need to cut costs in a recession will begin to cut their workforce first and many times will cut new hires as opposed to company veterans. Sadly, this was the exact situation new Bear Stearns employees were faced with in 2008, many of whom were just out of college.
There aren't many companies out there that are completely immune from recessions. So how should Gen Y's prepare for recessions and general downturns in business that occur? First, accept the fact that most companies view you as a number. It's an unfortunate fact that most companies disregard your personal situation when it comes time to cut jobs. With that said, be prepared! When you sense that an economic downturn is coming or business conditions within your industry are worsening, be sure to sock away more and more money to your emergency cash reserve and any retirement plans you may have.
Even though this is a topic I talked about on here last week, I can't stress enough the important role liquidity plays for Gen Y's who don't yet have vast wealth to tap should they be let go or see their salaries cut. Instead, plan ahead. When you see conditions in your business worsen, increase the percentage of money taken out of your paycheck that will go into your emergency cash reserve, whether it be a money market or an interest bearing checking account. Having enough cash to cover three months of anticipated living expenses is a sensible place to start. When you do this, you won't be caught flat footed should a worst case scenario occur and will have some much-needed liquidity to tap as you look for a new job opportunity.
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