How to survive a recession
Whenever the economy gets a little shaky, people worry and start looking for tips on how to survive a recession. However, history shows that recessions rarely come out of the blue. When you know what to look for, you’ll see telltale signs that the economy is heading toward a recession. It may seem like a recession is out of our control, but to preempt a potential downturn, study the market to prepare for what lies ahead.
A recession is a normal part of a healthy economy, with highs and lows, peaks and troughs, and periods of relative stability. History proves that when the economy hits a low point, it always rises again. It’s just a matter of waiting it out. So, when a recession hits, don’t panic or scramble around for quick fixes and risky ways to stay afloat – build a solid personal and professional foundation by developing an unshakeable mindset. Take this approach, and you’ll be able to create the life you want, regardless of the economy.
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How to survive a recession
The best way to survive a recession is to expect it to happen and prepare for it years in advance. Build your financial life on a foundation of smart choices, positive action and a firm understanding of the ebbs and flows of the financial market, and you’ll be in the best position to withstand any economic storm.
Adjust your mindset
Part of understanding how to survive economic collapse is to accept that downturns are part of life. Tough times will happen, but rather than waiting for the worst and then reacting, learn to be proactive. Adopt the mindset that you can handle anything. Tearing yourself down with the idea that you can’t handle challenges is a limiting belief that prevents you from thriving.
Most experiences in life are temporary, so actively create options and find opportunities to improve your situation. This is the epitome of an unshakeable mindset – the good times will be good, and the bad times will be manageable.
Establish an unshakeable financial plan
Financial loss is a major cause of the recession stress associated with an economic collapse. Any small financial ripple can significantly impact your financial and emotional well-being when you focus all your time and energy on one income-earning activity, like your job.
The best way to protect yourself from experiencing total despair is to put together a simple, actionable plan to help you achieve true financial freedom. With multiple income streams and a proper understanding of how the financial markets operate, you’ll avoid the frustration of being blindsided by a career layoff or a stock market crash.
Change your spending habits
Constant evaluation is a crucial part of knowing how to survive a recession, and this includes thoroughly assessing your spending habits. When you have disposable income, it’s easy to fall into the trap of developing expensive habits – or lifestyle inflation. However, when a recession is on the horizon, it’s time to take personal responsibility and adjust your budget. Pivot away from money-draining extras like fancy dinners, expensive gym memberships, and luxury goods, and start adding cash to your emergency fund. Remember that like a recession, this shift is only temporary.
Don’t be afraid to take business risks
A recession is one of the best times to take the plunge and start your own business. It may seem counterintuitive, but with a well-thought-out plan and a passion for your product, an economic downturn is an excellent time to become a business owner.
There are many financial perks to starting a business during a recession. Your vendors will also experience adverse effects, so you’ll be able to obtain raw materials, rental contracts and production expenses at a reduced cost. Plus, there will also be less competition, which provides an opportunity to grow market share and gain a competitive advantage.
All businesses thrive with quality staff members, and a recession is often a fruitful time for hiring managers. Struggling companies tend to cut costs or downsize during a recession, so you’ll have your pick of the talented applicants flooding the job market. The key to knowing how to thrive in a recession is understanding that a lull in the economy is often the best time to put on your entrepreneurial hat and take massive action.
Review your current investment portfolio
Starting a business or investing during a recession seems illogical to many people. However, the truth is that panicking during a downturn and cashing out your investments is probably the worst move you can make.
When you’re learning how to survive in a recession, it’s best to keep your money where it is or even move it to a more aggressive portfolio. Don’t make the fatal error of panic-selling or moving your money at the first sign of a market slump – chances are you’ll lose money by selling your shares for much less than their original purchase price. Plus, when the market eventually rebounds, you’ll also miss out on the opportunity to break even or increase your gains.
Don’t make rash decisions
Understanding when to control your urges is also a big part of learning how to survive in a recession. It’s human nature to panic when things aren’t looking great, but it’s possible to condition yourself to resist that urge. You know in your head that the market ebbs and flows, so use this understanding to overpower the human desire to react. Learning how to overcome adversity is a skill you can carry forward long after the recession is over.
Prepare for possible job loss or layoff
In a recession, layoffs are an unfortunate part of life, and no industry is immune. When you’re hunkering down for the long haul during a downturn, keep telling yourself that it’s just a part of life and that “this too shall pass!” And before you are laid off, take the necessary steps to protect yourself.
It’s a good idea to save three to six months of expenses in a high-yield savings account. Granted, this is easier said than done, but if you can, do it! Also, set some time aside to establish additional income streams, whether dividends from investment portfolios or a lucrative side hustle.
If you are laid off, immediately look for new opportunities. The bad is always present in a recession, but so is the good. Some firms and industries will lay off employees or downsize their workforce, creating opportunities for others – just keep your eyes open and grab these opportunities whenever they arise. Don’t let fear block you from taking advantage of potential life-changing opportunities.
Have confidence that you know how to survive in a recession
Like any other peak and valley, learning how to survive a recession depends on your outlook on the events. Keep a positive attitude, stay open to new ideas and opportunities, and remember that things happen around you, not to you. How you react to certain events and set yourself up for success impacts your survival more than anything else.
Understand this: a recession will inevitably hit, and the economy will experience a downturn. However, the markets will eventually rebound and trend upward again. If you panic and make fear-based decisions, navigating a recession may be more challenging than it needs to be, but if you work toward developing an unshakeable mindset, you’ll survive and thrive before, during, and after a recession.
Are you ready to overcome what’s holding you back?
Your limiting beliefs are the only thing standing in the way of greatness.