There’s no need to panic in the face of a slowing economy, but you should keep a close eye on your spending and avoid taking excessive risks. There are numerous positive steps you can take to improve your circumstances and recession-proof your life even if you are in the midst of a severe economic downturn. Adopting a realistic budget, setting up an emergency fund, and producing additional streams of income are just a few of them.
How do you get through a downturn in the economy?
But, according to Tara Sinclair, an economics professor at George Washington University and a senior fellow at Indeed’s Hiring Lab, one of the finest investments you can make to recession-proof your life is obtaining an education. Those with a bachelor’s degree or higher have a substantially lower unemployment rate than those with a high school diploma or less during recessions.
“Education is always being emphasized by economists,” Sinclair argues. “Even if you can’t build up a financial cushion, focusing on ensuring that you have some training and abilities that are broadly applicable is quite important.”
What will thrive in a downturn?
- While some industries are more vulnerable to economic fluctuations, others tend to do well during downturns.
- However, no organization or industry is immune to a recession or economic downturn.
- During the COVID-19 epidemic, the consumer goods and alcoholic beverage sectors functioned admirably.
- During recessions and other calamities, such as a pandemic, consumer basics such as toothpaste, soap, and shampoo have consistent demand.
- Because their fundamental products are cheaper, discount businesses do exceptionally well during recessions.
How can we safeguard money against economic collapse?
Stable sources of income, such as a job, pension, or Social Security, can help you lower the amount of cash and near-cash you need to protect yourself from a stock market crash. It’s also beneficial to own stocks in other markets, which may not fall as much as the US market during a downturn.
What should I put away in case of economic collapse?
Having a strong quantity of food storage is one of the best strategies to protect your household from economic volatility. In Venezuela, prices doubled every 19 days on average. It doesn’t take long for a loaf of bread to become unattainable at that pace of inflation. According to a BBC News report,
“Venezuelans are starving. Eight out of ten people polled in the country’s annual living conditions survey (Encovi 2017) stated they were eating less because they didn’t have enough food at home. Six out of ten people claimed they went to bed hungry because they couldn’t afford to eat.”
Shelf Stable Everyday Foods
When you are unable to purchase at the grocery store as you regularly do, having a supply of short-term shelf stable goods that you use every day will help reduce the impact. This is referred to as short-term food storage because, while these items are shelf-stable, they will not last as long as long-term staples. To successfully protect against hunger, you must have both.
Canned foods, boxed mixtures, prepared entrees, cold cereal, ketchup, and other similar things are suitable for short-term food preservation. Depending on the food, packaging, and storage circumstances, these foods will last anywhere from 1 to 7 years. Here’s where you can learn more about putting together a short-term supply of everyday meals.
Food takes up a lot of room, and finding a place to store it all while yet allowing for proper organization and rotation can be difficult. Check out some of our friends’ suggestions here.
Investing in food storage is a fantastic idea. Consider the case of hyperinflation in Venezuela, where goods prices have doubled every 19 days on average. That means that a case of six #10 cans of rolled oats purchased today for $24 would cost $12,582,912 in a year…amazing, huh? Above all, you’d have that case of rolled oats on hand to feed your family when food is scarce or costs are exorbitant.
Basic Non-Food Staples
Stock up on toilet paper, feminine hygiene products, shampoo, soaps, contact solution, and other items that you use on a daily basis. What kinds of non-food goods do you buy on a regular basis? This article on personal sanitation may provide you with some ideas for products to include on your shopping list.
Medication and First Aid Supplies
Do you have a chronic medical condition that requires you to take prescription medication? You might want to discuss your options with your doctor to see if you can come up with a plan to keep a little extra cash on hand. Most insurance policies will renew after 25 days. Use the 5-day buffer to your advantage and refill as soon as you’re eligible to build up a backup supply. Your doctor may also be ready to provide you with samples to aid in the development of your supply.
What over-the-counter drugs do you take on a regular basis? Make a back-up supply of over-the-counter pain pills, allergy drugs, cold and flu cures, or whatever other medications you think your family might need. It’s also a good idea to keep a supply of vitamin supplements on hand.
Prepare to treat minor injuries without the assistance of medical personnel. Maintain a well-stocked first-aid kit with all of the necessary equipment.
Make a point of prioritizing your health. Venezuelans are suffering significantly as a result of a lack of medical treatment. Exercise on a regular basis and eat a healthy diet. Get enough rest, fresh air, and sunlight. Keep up with your medical and dental appointments, as well as the other activities that promote health and resilience.
What is the maximum length of a recession?
The National Bureau of Economic Research (NBER) keeps track of the average length of US recessions. According to NBER data, the average recession lasted 11 months from 1945 to 2009. This is a step forward from previous eras: The average recession lasted 21.6 months from 1854 to 1919. The United States has had four recessions in the last 30 years:
- The Covid-19 Recession is a period of economic downturn. The most recent recession in the United States started in February 2020 and lasted only two months, making it the shortest in history.
- The Great Recession of 2008-2009 (December 2007 to June 2009). As previously stated, a real estate bubble contributed to the Great Recession. Although the Great Recession was not as bad as the Great Depression, its length and severity gave it the same moniker. The Great Recession lasted almost twice as long as recent US recessions, lasting 18 months.
- The Dot Com Bubble Burst (March 2001 to November 2001). The United States was dealing with a number of big economic issues at the turn of the 2000, including the impact from the tech bubble burst and accounting scandals at businesses like Enron, all of which were topped off by the 9/11 terrorist attacks. These issues combined to cause a temporary recession, from which the economy soon recovered.
- The Recession After the Gulf War (July 1990 to March 1991). The United States experienced a brief, eight-month recession at the start of the 1990s, which was triggered in part by rising oil prices during the First Gulf War.
How do you deal with depression?
Many people could walk out of one job and into another in the ‘good old days.’ The days of simply going into a separate corporate parking park and knocking on doors are long gone.
Of course, most rational people understand that keeping a job is more crucial than ever.
Even so, it’s good to be reminded that those with employment are inside the castle, while those without jobs are stranded in a harsh wilderness.
During the 1930s, not everyone had a difficult time. Those who were employed did not have to deal with the hardships that those who were unemployed did.
Meanwhile, individuals who are almost ready to retire might consider putting a little extra money down before leaving the workforce permanently. If the economy continues to deteriorate for another five to ten years, retirement fund projections could be drastically reduced. Before cutting the chord to your work income, it might be worth waiting until you believe the global crisis is over.
3. Maintain financial control
Even if free spending has decreased since the boom, personal money is still not a widely discussed topic in the media. With the financial crisis of 2010, we witnessed a significant shift away from trading at ADVFN.
This trend was brief, but it highlighted that in difficult circumstances, saving money is frequently more vital than making more. It doesn’t matter how much money you put at the top of your financial bucket if you have a hole in it. So, if the global economy is upsetting you, fix your own finances first before fussing about Bernanke’s Fed management.
4. Put your money on the line.
Hearing Warren Buffett declare that cash is a dangerous thing to hold makes me laugh because it’s a philosophy that is both accurate and counterintuitive to many people.
Cash, on the other hand, is useless paper that can be transformed into confetti with the flick of a switch. As I travel the world, I witness a wide range of pricing and how they fluctuate from month to month.
It’s only a question of how the next few years play out. Many aging ‘Jeremiahs’ anticipate a tidal wave of inflation sweeping over the globe, threatening to wipe out cash holdings. You don’t have to believe it; just keep an eye out for it to start. If you see it coming, move out of currency and into hard assets as soon as possible.
In any case, strive to convert your cash into items that will provide you with inflation or, better yet, income. Purchase a field and rent it out to horse owners, for example.
Anything that protects your capital against inflation while also generating cash flow is something you should look for, because if inflation occurs, your cash savings will be wiped out.
5. Maintain a positive attitude
It may be difficult out there, but someone is making a lot of money. They aren’t planning for the end of the world by reading depressing articles like this one. Sure, they got lucky, but fortune favors the bold.
It is the tail that suffers the most during a recession, even during the deepest depression. To survive, you must be at your best, with a grin on your face and an eye toward the future. Then you might do exceptionally well. The folks who freeze in fear of the approaching disasters are the ones who are most likely to be carried away.
There will be plenty of good times for people with a positive mental attitude, a focus on what matters, and a natural desire to work hard, no matter how bad things become.
While this depression appears to have no end, it does not have to define us. Most of us, like the ants in Aesop’s fable, are in good shape. The grasshoppers will be the ones to suffer.
Do rents decrease during a recession?
During a recession, rents can rise and fall. Rents will rise, fall, or stay the same depending on the location of a rental property and how hard the local economy is struck by the recession.
For example, during a recession, a working-class housing market with large job losses will likely see an increase in vacancies, lowering rents. This occurred in North Dakota in 2015, when oil prices plummeted, as the state’s economy was heavily reliant on high oil prices.
Rents may, on the other hand, remain stable during a recession if a property is located in a less vulnerable region and/or rented by a tenant with more resources.
The city of Houston, Texas, is a fantastic illustration of this. Despite the fact that oil prices fell in 2015, property values in Houston rose, owing to the metro area’s broad economy, which is no longer based solely on oil extraction.
In a downturn, rents are more resilient than property values, according to Brian. During recessions, nationwide rents tend to flatten out see this graph:
However, as Kathy points out, in a recession, national averages can mask some markets growing while others sink.