The recession has affected almost every other industry and many people experienced pay cuts and layoffs, much to their dismay as they have been hard working and conscientious workers. It’s not your fault, but feeling down, anxious, or panicked is counterproductive.

The natural reaction of these people is to worry about the future. This can cause them to adopt knee-jerk reactions about their finances that are detrimental to their retirement goals. The practical way to survive a recession is to calmly assess your financial situation and act accordingly.

In any recession, cash is king, as the economy tends to spiral into deflation due to a lack of consumer demand. For families in unstable financial conditions or with uncertain employment, it is wise to put more money away in emergency savings. The more hectic your job, the more conservative you need to be about your finances.

If your paycheck is steady and secure, then pay off your credit card debt. Try to use less credit whenever possible. If you’re shopping and have enough cash to pay, stick with that. Don’t open a store account just to get a discount. When your monthly credit card bills are due, pay them on time, rather than making only the minimum payments. You will only dig a deeper debt hole by increasing your debts.

Manage your credit wisely and check your credit report often. You should try to keep your credit score high to get better interest rates for new credit in the future. More importantly, this is the time when credit card companies unleash their predatory claws. Those with low credit scores are especially vulnerable and have to struggle harder to deal with their financial problems.

But even if your credit score is respectable, you can expect credit card issuers to raise your rates and lower your credit limit. If this happens to you, file a formal complaint with the credit card company and let them know that you plan to close the account if the rate is not reduced. They usually give way if your account is in good standing for a long period of time.

In general, I am not against the use of credit cards. They offer solid protection on online transactions and credit cards with their cash back bonuses and reward points are a great way to save some money. Just make sure the card doesn’t charge you any annual fees.

You can continue spending and investing, but they need to be re-evaluated to take up a smaller proportion of your income. I am not suggesting that you get rid of all your investments, regardless of the fundamentals. Changing your mix of investments and making sure they are right for the times will do the trick.

Never put all your eggs in one basket. That’s a basic investing rule for a bull or bear market. Diversify your investments between sectors and also different asset classes such as stocks, bonds, gold, funds, fixed income and cash.

Next, review your Individual Retirement Account or your company’s 401(k) investment plan. There are Ponzi schemes (look no further than the trusty Bernard Madoff) that may have offered you consistently high returns in good times, but are likely to go bust in a market downturn. Your retirement account should be conservative. I don’t know about you, but I can accept zero returns but not zero principal for my retirement fund.

To help you make the right financial decisions, you should also closely monitor financial news to keep up with the latest developments in the economy. Pay attention to any new tax laws that may help or affect you. Be adaptable as change often comes with hard times.

The more you stay in touch with the news and information around you, the easier it will be. Lastly, have a solid backup plan with an emergency fund to support 6-8 months of expenses. You can’t go wrong with this adage in life: “Tomorrow belongs to the people who prepare today.”