Guru Speak

Before we talk about how to stay afloat during the recession, let's first discuss its definition.

Wikipedia defines a recession as "a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production and wholesaleretail sales". A sustained recession may become a depression. During such a time, people typically stop, or at least reduce, spending on things like dining out, new gadgets, cars and jewellery, while businesses often cut back on expenditures like informationtechnology equipment, business travel, promotions and the hiring of new employees. Surviving during a recession is no easy task when money is tight, whether for individuals or for businesses.

The financial squeeze caused by a recession can have many negative effects, including increased levels of stress. This, in turn, can lead to depression, which can result in decreasing productivity, and so the cycle continues. One recommendation I would give is to take it easy, don't panic and don't overstress. If you're struggling financially during a recession, the likelihood is so is everyone else. The next step is to start closely tracking both your income and your spending. The most simple rule is do not spend more than what you earn. Also, take extra time to think about saving any extra amount of money you are making that you do not need to spend.

Every individual has certain requirements, and money is often the key to fulfilling them. You may squeeze your budget, but even that has its limits! Again, please consider saving. Put your money with a company with a high level of financial stability that can protect yourself and your family in the long run. Those who are financially creative will have no problems managing to do this. Those who are not may gain some tips from the following:

First, I would recommend staying out of stores when there is nothing you need. Leave your credit cards at home when you go shopping and bring only as much cash as you can afford to spend. If you can reduce unnecessary expenses even by 25 per cent, you can see an improvement in your overall cash flow, which means you will have more money to save.

Second, build up an emergency fund. You should build up a cash fund to help you if needed. This is true anytime but especially so during a period of recession. You can build up a reserve fund. Remember: every little bit helps.

For those who enjoy investing, consider bluechip stocks. A recession is not necessarily the right time to stop investing in the stock market completely. Indeed, there is a good argument to buy while prices are low. Consider choosing stocks with good fundamentals and which are likely at least to give a good dividend or make a rapid recovery after the recession even if they may not offer good dividend returns right now.

Third, for those who have an insurance savings policy, my recommendation is to continue paying insurance premiums. It is one of the safest ways in which to retain your money, and you will know you or your loved ones are protected in case something goes wrong. Also, you can expect a lump sum of money at the end of the insured period. Insurers hold a reserve fund as required by the government. Knowing this will afford you peace of mind in case the insurer encounters financial troubles.

Finally, one most important thing I have learned from Thais is to smile, no matter what is happening. It really does help relieve your worries, and you can think more clearly once you are no longer stressed. Who knows? There may be more opportunities in a recession than you imagine.

Wilf Blackburn is president of Ayudhya Allianz CP Life.