Seven Ways to Prepare for a Layoff

Job security is a dodgy notion.

Just ask employees at Yahoo!. They're waiting out rumors that the tech giant will slash hundreds, or possibly thousands, of jobs to increase profitability and help rejuvenate its stock price.

The Yahoo! layoffs aren't likely to be an isolated event in the coming year.

With the economy teetering on the edge of recession and showing signs of an economic slowdown, so-called secure jobs really aren't.

A decrease in consumer spending last month resulted in retailers having their worst Christmas in five years, according to government figures. Add this to the stumbling housing market and the massive credit crunch, and you can see why a recession is knocking at the door.

One result of a worsening economy can be a decrease in your salary or, even worse, the loss of a job.

You can take a number of steps to help shield yourself from the bad effects of a recession and help you weather through with a minimum of disruption to your personal finances.

These are seven steps to take:

1. Create and expand your emergency fund.

If you don't have an emergency fund, make setting one up a top priority. If you do have one, take the time to reassess how much you should have in it.

With job security being a little less reliable during a recession and finding a new position being more difficult, you may want to increase the amount you have set aside for this fund from three to six months of living expenses to much as a year's worth. This is especially true if you have a single-income family, are self-employed or are in a career that usually experiences layoffs during a recession.