by Kaitlyn Ranze
It’s no secret that the job market is tough right now. But if you or someone you love is about to graduate from college, you might wonder just how bad things will be.
Unfortunately, there’s no easy answer. The truth is, it depends on many factors – from the industry you’re looking to enter to where you want to live.
But there are some general things you can expect if you’re graduating in a recession. Here’s what you need to know:
1. You’ll probably have to move back in with your parents.
It’s no secret that the 2008 recession hit millennials hard. Many of us found ourselves unemployed or underemployed, struggling to make ends meet. So, it’s no surprise that many of us moved back in with our parents.
One of the most significant financial decisions you’ll make during this time is where to live. For many, the obvious king is moving back in with your parents to save some money.
Here are three reasons why moving in with your parents is a smart financial move:
- You’ll save on rent and utilities. The average one-bedroom apartment rents for around $1,722 per month, which can add up to a lot of money over the course of a year. When you live at home, you can save that money and use it to pay off debt, start an emergency fund, or invest in your future.
| Unit Type | Average Rent | MoM % Change | YoY % Change |
|---|---|---|---|
| 1 Bedroom | $1,722 | -0.3% | 25.5% |
| 2 Bedroom | $2,047 | -0.4% | 26.8% |
- You’ll have less expenses overall. When you live independently, you have to account for many costs that you may not initially consider. Things like groceries, furniture, and transportation can add up quickly. When you live at home, your parents can help with some of these expenses, saving you money in the long run.
- You’ll have a built-in support system. Transitioning to adulthood can be challenging, and it’s nice to have a support system to help you through it. When you live at home, your parents can help you with job hunting, budgeting, and navigating the adult world. This can be especially helpful if you move to a new city after graduation.
2. Your job prospects might not be as good as you hoped.
A recession can have a major impact on your job prospects. The most obvious way it does this is by making it harder to find a job in the first place. With fewer jobs available, competition for positions gets tougher. And when companies are cutting back, they’re often more selective about who they hire.
But even if you find a job, a recession can still make it harder to keep. During tough economic times, companies are more likely to downsize or even close their doors entirely. So even if you’re employed, you could still risk losing your job.
Of course, not all jobs are equally affected by a recession. Some industries, like construction and manufacturing, suffer more during an economic downturn. Other sectors, including healthcare and education, are typically more recession-proof.
So if you’re worried about a recession, it’s important to consider the industries you’re interested in and the specific job roles you’re targeting. That way, you can make the best possible decisions about your career during these challenging times.
3. You’ll probably have to take a lower-paying job than you wanted.
A recession can have a considerable impact on your earning potential.
Generally speaking, during a recession, businesses are less likely to give raises and more likely to lay off employees. This can lead to a decrease in your wages if you are employed. If you are unemployed, finding a job that pays as much as your previous position may be more difficult.
Of course, there are always exceptions to the rule. Some businesses may continue to give raises during a recession, depending on their industry and profitability. And some people may be able to find a higher-paying job during a recession if they have in-demand skills or experience.
In general, though, a recession will likely negatively impact your wages. So if you’re thinking about looking for a new job, you should consider the possibility of a decrease in salary.
Why is that? Recessions can put a lot of pressure on businesses. Many are cutting costs where they can, often freezing or reducing wages. In some cases, it may even lead to layoffs. So if you’re employed, be aware that your company may be struggling and may not be able to give you a raise.
Even if your company is doing well, it’s still wise to be prepared for the possibility of a lower salary when negotiating your next contract. After all, businesses often look to save money during a recession, which may mean offering lower wages to new employees.
4. You may have to postpone your plans for further education.
The 2008 recession hit millennials hard. To make ends meet, many people went back to school to get a degree to help them qualify for better jobs. Unfortunately, this didn’t always work out the way they planned.
It might seem like a good idea at the time, but it might not be. Here’s why:
You’ll graduate with even more debt.
If you’re already struggling to pay off your undergraduate loans, adding more debt will only worsen things. Not to mention, interest rates on student loans are likely to increase during a recession, so you’ll pay even more in the long run.
There are fewer jobs available, and you could wind up unemployed.
During a recession, businesses are more likely to cut costs by hiring fewer employees. So, even if you find a job after graduation, it may not be in your field of study. The unemployment rate for recent college graduates is typically higher during economic downturns.
Your degree may not be worth as much.
Employers are less likely to value degrees from prestigious schools during a recession. So, if you’re considering going to grad school to get a degree from a top-ranked school, you may want to think again.
5. You may have to put your plans to start a family on hold.
If you’re considering starting a family, you may want to wait until the economy improves. Here are three reasons why:
1. You may not be able to afford to have a family.
Having a baby is expensive. During a recession, you may be unable to afford all the costs associated with having a child, like childcare, medical bills, and other necessary expenses.
2. You may lose your job.
If you or your partner loses your job during a recession, it can be difficult to make ends meet. This is especially true if you have a family to support.
3. Your stress levels may increase.
Dealing with a recession can be stressful, and if you’re already struggling to make ends meet, adding a baby to the mix can make things even more difficult. If you’re considering starting a family, make sure you’re in a good place financially and emotionally before taking the plunge.
A recent study found that having a family during a recession can put a significant financial strain on couples. The University of Washington’s research looked at data from over 6,000 families and found that those who had a baby during a recession were more likely to experience economic hardship five years down the road.
6. You’ll need to be extra careful with your finances.
Life after graduation isn’t as fun for those graduating during a recession. Priorities shift to reflect the economic climate. Covering discretionary expenses like concert tickets and travel has to be a little more thoughtfully planned as you pad your emergency fund and pay down debts.
- Make a budget and stick to it. Track your income and expenses to know where your money is going.
- Cut back on unnecessary expenses.
- Save money. Put some money each month into savings to have a cushion in tough times.
- Invest wisely. Don’t put all your eggs in one basket. Spread your investments around to be more diversified.
- Be careful with credit. Don’t max out your credit cards or take on too much debt.
- Plan for the future. A recession can last several years, so plan how you will cope financially.
- Reflect on your relationship with money. Many people don’t realize that their relationship with money can make a big difference in how they handle a recession. Those who are good at managing their money are usually better equipped to weather the storm during tough economic times. On the other hand, those with a poor relationship with money may struggle more during a recession. So, how can you tell if you have a good or bad relationship with money? Here are some signs to look for:
- Do you tend to spend more than you can afford?
- Do you often find yourself in debt?
- Do you have trouble saving money?
- Do you feel anxious or stressed about money?
If you answered yes to any of these questions, then you might have some work to do. Luckily, by following these tips, you can weather the storm of a recession and come out ahead.
Of course, it’s not all doom and gloom. There are some positive things about graduating in a recession, too.
For one, you’ll probably be more mature than your peers who graduated in better economic times. And you’ll have an opportunity to learn how to be flexible and adaptable – two skills that will come in handy no matter what the job market resembles.
So, if you’re graduating in a recession, don’t despair. There are still plenty of opportunities out there – you just might have to work a little harder to find them. And remember, this too shall pass.
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