Just think about it. There have been nearly a million US layoffs in 2009 alone. Many of these people received no severance pay, no skills training, or anything else that would ease the transition into a new career. To put it bluntly, they are screwed. Had they invested in themselves and worked hard to create multiple income streams, the pain of a layoff would not have been as acute.

The harsh reality of today’s business world is that we cannot “trust” our employers to “take care of us”. For the most part, they will accept your labor and pay you a fair wage. Anything more is highly unlikely, no matter what kinds of promises you are given.

In addition, the old model of hourly wages is a losing game. Because of technology and innovation, many of the jobs that had previously been paid a high hourly wage (like auto workers for instance) can be automated or done more cheaply abroad. The focus needs to be on results and value creation. If you can create more value in one hour than someone can create in 100 hours, you can and should be paid more for that one hour than the other person is paid for 100 hours. I realize this is offensive to some people but times have changed and the only way to ensure your own security is to adapt to the changes.

Even if you own your own business, you should be developing more than one revenue source. Imagine if you were the top seller of Widget A and some innovation came along that made Widget B far more relevant overnight. Your Widget A is suddenly worthless to your previous customers. If your entire business was built around Widget A, you are looking at some hard times ahead. But if you had previously developed a Widget B business, you could shift your focus and your resources to your Widget B division, easing the pain of the Widget A business destruction.

So how do you go about diversifying your income?

Well, it’s easier to do if you work for yourself but everyone (even employees) can and should do it. Here are a few tips:

1. Perform an honest and real inventory of your skills and your ability to create value.

2. Having completed an honest and in-depth skills inventory, take a look at what you are currently doing and look for untapped areas of value creation (i.e. low hanging fruit). For example, if you are knowledgeable in a trade, maybe you could teach a class at night or start a blog about your profession. Or maybe you could write a how-to guide and sell it as an e-book. These things diversify your sources of income within your body of knowledge.

3. Start an automatic investment plan. Use dollar cost averaging and put a fixed percentage of your weekly earnings into an index fund or a bank account. The magic of compound interest will ensure that your invested money works for you day and night.

4. Pay attention to the things you could use to help you in your life. For example, is there some gadget or tool that would make your life a lot easier? Have you looked for it and cannot find anyone selling it? That could be your cue to develop and sell the gadget yourself. I used gadget as an example but it could easily be software, information, or a service.

5. Leverage the information economy. There is no medium that provides greater leverage and lower risk than information services. Contrary to traditional business ventures, creating an income stream in the world of information does not require much of an up-front investment. Spend time on the internet looking at what people are selling and getting paid for. Maybe there is something that you could do better or similarly in another area of focus. What are you currently paying for online? Somewhere, someone is receiving your payment as a source of his income. Why can’t that be you?

6. If you work for someone else, negotiate the ability to “moonlight”. Some employers prohibit their employees from developing alternate income streams. This is nothing more than an attempt to control employees. If your employer does not allow you to develop multiple streams of income, ask him to double your salary and provide you with contractual job security (i.e. you get paid for x years no matter what). Chances are your employer will not want to do this and will acquiesce to your request to diversify your income.

7. If your employer is stubborn and does not want to allow you to work outside of your job with him, you should probably find a new place to work and negotiate a moonlighting provision from the start. But since it is not always feasible to find a new job, you can take advantage of internet privacy features to get yourself started. When registering a domain name, choose the privacy option. Also, don’t use your home phone number or address during any communications related to your new income source. Instead, get a PO box and a virtual voicemail box. (A virtual voicemail box is a unique phone number assigned to you that allows you to record a greeting and have customers leave you messages. It’s cheaper than a cell phone and costs much less.) Don’t use your name in your new email address either. Choose a generic email address like “contact@domain.com” or “support@domain.com”. If you are creative enough, you can keep your information private.

The above tips are just a few ways to get you thinking about diversifying your sources of income. Ultimately, diversifying your sources of income is the only way to achieve any measure of true security in today’s economy.

For those who do not know what a coupon code is…have you ever gone through an online checkout and seen a little box that says “Promo Code” or “Coupon Code”? If you have seen the box and not entered a code into it, you have paid more for the item than you could have.

We use coupon codes on this site. For example, in one of our recession tips, we mention a budget spreadsheet at The Spreadsheet Store. But rather than simply mentioning the spreadsheet, we also offered a 20% off coupon code to use in their online store. Don’t tell anyone, but it’s RECESSION20. OK, tell whomever you wish to tell.

A good way to find coupon codes is to do a Google Search. If you clicked on the Google Search in the previous sentence, you noticed lots of sites that specialize in collecting coupon codes from online retailers.

Another great way to find coupon codes online is to visit forums and blogs related to the product you are looking for. Many times, companies will issue coupon codes to these sites in an effort to promote their product to those sites’ visitors. If you are interested in fitness equipment and can’t find the coupon codes you are looking for in a general Google search, go to a fitness website, register and have a look around. You may be surprised at the discounts you will find at these sites.

If you absolutely cannot find the coupon codes you are looking for and you have some time, you may wish to experiment with certain generic codes like 20OFF or MEMBERDISCOUNT or things like that.

Online coupon codes usually take just a few minutes to find and save you lots of money.

Let’s face it. We all want to provide for our families and most of us feel bad if our significant other or children want something that we cannot provide. Don’t fall into the trap of acquiescing to requests by putting things like shoes, clothing or video games for your family members on a credit card.

Just as you love your family members, they also love you. Sit them all down and explain to them exactly what is going on with your economic situation. You don’t have to tell them how much money you make but you can say that your income has been cut in half (or whatever the percentage may be). If you are in danger of losing your job and need to save for an emergency unemployment, tell your family this. You might also point out examples of relatives and other people who lived through the Great Depression and ended up prospering once the economic turmoil subsided.

There is no easy way to talk to your family about not having enough money, especially if you have a strong sense of pride. In all honesty, you’re going to have to stuff your pride for your family’s sake in this case. Let them know what is really going on and ask them to help you save money for a better future. Tell them that once the family makes it through the economic crisis together, you can talk about spending money on fun things again.

If you don’t communicate your problems honestly with your family, you cannot reasonably expect them to become a part of the eventual solution.

What does this mean? It means you take 10% of your after-tax income and save it, preferably using dollar cost averaging in an equity index fund. You do this before making your budget or paying your other bills and you do it every time you get paid.

You may be thinking, “The stock market is tanking…why would I do that?” We hear ya. The beauty of this strategy is that during the down times, your 10% buys more shares and during the up times it buys fewer. This means you will be insulated from stock market swings. Add in the effects of compound interest and you may just end up rich no matter what the economy and stock market do.

Some great books to check out in terms of paying yourself first are The Wealthy Barber and The Richest Man in Babylon.

We highly recommend both books.

If you do nothing else suggested on this blog, pay yourself first. It is the single best thing you can do for your financial future.

Start by writing down all of your expenses for one week and taking a look at how you are spending your money. This will be an eye-opening experience. Divide your expenses into categories and make cuts where you can.

Also be realistic about your income. If you make $1000 per month after taxes, your budget should not have more than $900 in total expenses allocated. The “missing” 10% ($100 in this example) is used to pay yourself first. In other words, no matter how much or how little you are making, it always pays to pay yourself 10% of your after-tax income before setting your budget.

We can hear you grumbling right now but in this case it’s truly “No Pain, No Gain.” (But hey, this is just Recession Tips, not Recession Rules so do what you want.)

If you are not comfortable setting up your own budget, there are tools available to help you set one up.

PC users should take a look at Microsoft Money and Mac users should take a look at Quicken for Mac.

If you know your way around Microsoft Excel, you should check out a budget template. Recession Tips members can save 20% on this budget template by entering coupon code RECESSION20 at checkout.

Of course, no tool will help you unless you commit 100% to live within your means.

Yes, we said ALL of your expenses. If you pay your telephone bill for $100 or buy a candy bar for a buck, write it down.

At the end of the week, tally all of your expenses and see where you are spending your money.

Take it one step further and divide the expenses you’ve written down into categories.

This is a great way to gain some insight into where your money is really going. The results can be eye-opening.

If you write down all of your expenses for a week, you will certainly find at least one or two areas where you can reduce your spending.

Some great budget categories to start with are listed below. The list is by no means complete but it will get you started and that’s half the battle:

Entertainment and Leisure
Books, Magazines, Newspapers
Cultural Events
Membership Fees
Entertaining
Movies & Video Rentals
Music Downloads
Sporting Events
Sporting Goods
Tapes & CDs
Toys & Games
Vacation Lodging
Vacation Travel

Family Expenses
Childcare
Clothing
Life Insurance

Education
Books
Tuition
Education-related Fees

Healthcare
Dental care
Eyecare
Hospital
Physician
Prescriptions
Health Insurance

Food
Dining Out
Groceries

Charitable Donations/Gifts
Charitable Donations
Gifts

Personal Care
Haircuts

Pet Care
Pet Food
Pet Supplies
Veterinarian

Residence
Rent
Household Furnishings
House Cleaning
Yard Service
Homeowner’s Dues / Condo Fees
Homeowner’s/Renter’s Insurance

Taxes
Federal Income Tax
Local Income Tax
Medicare Tax
Real Estate Taxes
Social Security Tax
State Income Tax

Utilities
Cable/Satellite Television
Cellular
Electricity
Garbage & Recycle
Health Club
Natural Gas/Oil
Online/Internet Service
Telephone
Water & Sewer

Vehicles/Transportation
Car Payment
Gasoline
Car Maintenance
Car Insurance
Public Transportation

Interest and Financing
Mortgage Interest
Student Loan Interest
Other Loan Interest
Bank charges and overdraft fees

1. Write it down.
2. Make a budget.
3. Pay yourself first.
4. Examine your monthly debits.
5. Be realistic about your cable television needs.
6. Ditch the land line.
7. Get an unlimited text messaging plan.
8. Talk to your spouse and/or children about your economic situation.
9. Shop with a list and stick to it.
10. Use coupon codes when shopping online.
11. Make day trips close to home instead of going on an extravagant vacation.
12. Develop a “prison workout.”
13. Buy a coffeemaker.
14. Drink lots of water.
15. If you’re a man, cut your own hair.
16. If you’re single, use an online dating service.
17. Wake up early.
18. Press “Mute” during commercials.
19. Sleep on it.
20. Avoid “convenience” stores.
21. Unless you drive a Ferrari, don’t buy premium gasoline.
22. Reduce your stress.
23. Clean out your closets and your garage.
24. Bring your lunch.
25. Pay more than the minimum credit card payment each month.
26. Pay off high interest rate credit cards first.
27. Bathe and brush your own pet.
28. Develop a charity plan.
29. Eat at restaurants on special occasions only.
30. Never sign up for store credit cards.
31. Be smart about who you let into your inbox.
32. Use your public library.
33. Have a snack and drink a large glass of water before going shopping.
34. Get a Netflix membership.
35. Use movie theater outings for special occasions only.
36. If you have pets, find a veterinarian who offers free ancillary care.
37. If you don’t drink, never “split the check” with people who do.
38. Take digital photos and store them on your computer.
39. Always carry an energy bar.
40. Use a water filter.
41. If you are single, go for a walk on your first dates.
42. Never use ATM’s that charge a fee.
43. Forget about picking stocks.
44. Buy store-brand trash bags.
45. Join a professional association.
46. Buy your clothing from outlet stores.
47. Never borrow money to pay for food, utilities or clothing.
48. If your employer matches 401k contributions, contribute (at minimum) the percentage they match.
49. Stay away from the freezer aisle.
50. Go outside for some fresh air and sunlight.
51. Call your credit card companies and ask them to lower your rates.
52. Buy dessert at the grocery store.
53. Become familiar with all of the benefits offered by your employer and use them.
54. Cancel your newspaper and magazine subscriptions.
55. Don’t leave your job until you have another one lined up.
56. Never buy anything located near the checkout counter.
57. Don’t use your checking account overdraft protection as a regular line of credit.
58. Trade babysitting nights with a friend or neighbor.
59. Ask for discounts on products and services.
60. Sleep for eight hours each night.
61. If you can’t pay all of your taxes, set up an installment plan.
62. Monitor your credit.
63. Avoid checking account overdraft and credit card over limit fees.
64. Use store discount cards.
65. Pay your bills on time.
66. If you’re signing up for a monthly service, ask for any setup fees to be waived.
67. If you can’t pay a bill, call your creditor and ask to work out a payment plan.
68. Ask your boss whether layoffs are planned at your company.
69. Open your mail.
70. Use dollar-cost averaging to invest in an index fund.
71. Trade in your booze and cigarettes for a gym membership.
72. If you have cable television, skip the HDTV purchase.
73. Never take an early withdrawal from your retirement account.
74. Take public transportation when possible.
75. If you have to drive to work, set up a carpool.
76. Buy generic prescription medication when available.
77. Use coupons for grocery shopping.
78. Don’t exceed the posted speed limit.
79. Consider public school for your kids.
80. Beware of phone/cable/internet bundles.
81. Turn down the heat.
82. Avoid flagship shopping districts.
83. Forget about keeping up with the Joneses.
84. Before making a large purchase, calculate how many hours of work it takes for you to make that much money.
85. Instead of giving a birthday or Christmas gift, write a heartfelt letter to someone.
86. Don’t buy lottery tickets.
87. Use positive self-talk to attract wealth and income.
88. If you work for someone else, start a side business.
89. Beware of the grocery shrink ray.
90. Know how much you and your time are worth.
91. If you are single, do not get involved in any way with a spendthrift.
92. If you need to purchase an expensive item, bring competitors’ advertisements with you to the store.
93. Don’t read catalogs (even for fun).
94. Don’t lend money to your friends.
95. Don’t “invest” in “get rich quick” programs.
96. No one needs 50 pairs of shoes.
97. Do not go to Las Vegas or Atlantic City (or anywhere else where gambling is legal).
98. Diversify your sources of income.
99. Live like your parents lived.
100. Don’t go it alone.