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Maintain Perspective in a Recession

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Although the media makes a great deal of noise when a country is in, or thought to be approaching, a recession, the fact is that it isn’t the end of the world. If you conduct your affairs conservatively, don’t depend entirely on your day job for your income, and plenty of cash on hand while boasting little or no debt, you’re going to be fine. Likewise, if you run your own business and focus on keeping costs low, margins sufficiently high, and reduce spending in-line, you’re probably going to come out ahead of the game by using these downturns to dollar cost average into your portfolio. In hindsight, many professional portfolio managers were using the recession of 2001 to buy shares in companies that would later increase exponentially.

This advice is hardest to follow with those bogged down with large student loan bills or those trying to raise a family. When overwhelmed with a mortgage payment, car loans, baby formula, and credit card debt, the idea of not relying on a job can be terrifying. Yet, in these circumstances, it’s all the more important that the you recession proof your life, even though it’s going to be far more difficult than for someone who is young, unattached, and highly compensated.

Those who have studied the time value of money know that it can decades to reach true financial independence and statistically, you are likely to encounter many recessions during that time, perhaps even a depression. Just like getting in shape, earning your education, or raising successful children, building your fortune and becoming wealthy is not easy. In fact, at times, it can be downright frustrating, painful, and exasperating. But in the end, it’s worth it if you have done it honestly, ably, and admirably.