More and more often, we hear the word downsizing. This is what companies do during recessions, and we are entering the scariest one in half a century. As gloomy as it may sound, downsizing is actually a healthy and reasonable response of a business to a slowing demand. Payroll expenses are mostly fixed, which means that no matter how much the company is producing, staff still needs to be paid. Therefore, reducing the headcount is a rational step. Also, labor costs are usually high in proportion to other expensed, especially in the industrialized world, and cutting them will make more difference to the bottom line than, for example, using smaller size fonts or turning computers off at night. A business is not a charity and its purpose is to survive and remain profitable. Therefore, unless you work for a collections agency, you need to be prepared.

Losing a job may be a traumatic experience, especially if you already live from paycheque to paycheque and if you have to provide for your family, not just yourself. Suicides tend to go up during recessions, often as a direct result of a job loss. But a job loss doesn’t have to the end of the world. There are numerous examples when people who had been laid off used this opportunity to make their lives better. When we go to work every day, we often don’t realize that our jobs consume us entirely. We don’t have time or the energy to stop and think about whether we are on the right track and notice better opportunities. When your job is out of the picture, you are much more likely to discover an unexpected opportunity, a talent or a passion which can make your life much more fulfilling and perhaps allow you to make more money and have more freedom. Most of us don’t have the courage to explore new opportunities when we are comfortable, but when the circumstances force us, we can do it. There are two keys to making the best of losing your job: (1) keep your expenses low and (2) stay positive.

The majority of regular people tend to spend most of the money they earn. The more they earn, the more they spend. If you analyze your expenses, you will be shocked by how much you spend on what you could live without. If you get downsized, this is the first thing to do. List all your expenses, sort them from largest to smallest and see what you can eliminate or reduce. Unless your mortgage is paid, chances are that your largest expense is housing. Can you downsize? A car would probably be number two. How about public transit? Go down the list and try to find savings opportunities.

Try to see it as a positive event opening opportunities, rather than a tragedy. Many people have discovered that what you can afford doesn’t make you happier. Use your new free time wisely, keep your eyes open and smile!

Nikolay Sisan is a Certified Financial Planner and freelance writer in Vancouver.