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Economic downfall tends to have a domino effect. People become worried they may lose their job, so they cut back on spending. The problem is everyone cuts back on spending. Before you know it those people that cut back aren’t spending their money at your store and you are out of a job.

There are a few things you can do to help lessen the impact of a recession.

1. Evaluate your savings: A good rule of thumb is to have enough on hand to cover your expenses for 3 months. Now that is certainly a difficult proposition to swallow be remember that no one ever plans to be homeless. Expect the unexpected. You’d be amazed that cutting back here and there each month can add up to a substantial savings. What if you made your coffee yourself each morning instead of buying it? Take a moment to think about how the small things in your life can add up to substantial savings.

2. Avoid panic if you have invested in the stock market: There is an old adage “Never try to catch a falling knife”. It’s a classic and it still rings true today. How many people do you know who have pulled their money out AFTER the market has gone down. Doing so is a guaranteed way to lose your money. Face the facts, the stock market isn’t some magical machine that automatically doubles your money every year. It has it’s ups and downs. The good news though, it will go back up. It might not go back up right away but it will go back up eventually. If you can afford to wait then by all means, wait. The exception here is if you think a company you are invested in has the possibility to go under for good. In which case try to get your money out. Remember: Buy low, Sell High. Not the other way around.

3. Plan for the long run: Politicians are quick to tell you how they are helping stimulate the economy through bailouts and tax rebates but we don’t see the impact till nearly 18 months later in most cases. There is no telling how long this recession will last so think ahead when you make purchases. Especially large purchases. Will you still be able to afford that new car if you get laid off?

4. Pay off those Credit Cards: This is important. Very important. Pay down the balances now while you can. It will give you some extra breathing room in case of an emergency. Also, while it isn’t the best option the extra room in your credit line will give you some flexibility should you need to turn to your credit card as a “rainy day fund”.

5. Keep your Health Care: When times get tough you might be tempted to drop your health care insurance. Do NOT do it. If you are laid off look into programs immediately so that you can continue your coverage. All it takes is one accident or illness and it can wipe you out and leave your credit in shambles.

6. Try to look on the bright side: Saving isn’t as fun as spending. Everyone wants a new car, a new TV, or that slightly larger house down the street. However, when things do start to look bullish again you will have a savings nest egg to put towards that down payment.

Surviving a recession is all about planning for the future. You can do it, it just takes a little work.