Recession Survival Guide: Strategies for Financial Stability


Todd Tressider over at www.financialmentor.com introduced this concept to me and it makes me wonder. We’ve seen many recessions and stock market crashes come and go over the years, from the 1998 tech boom-and-bust, to the 2008 housing bubble crash, to the three month so-fast-you-probably-missed it COVID-induced recession of 2020. Recessions are a normal part of economic development, and one thing we have always seen in that the market goes up again.

I’ve always believed that the best thing to do when these times hit is to sit tight, roll with the punches, and just wait it out until the market inevitably rises again. The basics of personal finance never change, and they will always help position you, regardless of what the future holds.

But there are a few things that are different this time, that are making me wonder if things will take longer than usual.

In the past, governments had a strong hand in managing economic slumps, using corporate bailouts and interest rate hikes to pull the economy out of the slump.

But when inflation affects consumer goods like food and gasoline, the best way to manage inflation is by increasing interest rates to stabilize prices. 

The problem is, raising interest rates also raises the rates of the national debt, and that’s not good. 

Government-imposed interest rates were kept so low for so long that we got used to a life of easy credit, easy borrowing, and easy stock returns. 

But now, the argument goes, there is no more interest-rate flexibility. 

Two: The sustainability issue. Is it realistic to assume economic productivity will ALWAYS increase, when resources are, of course limited? Put another way, could we be approaching maximum level environmental exploitation? 

After all, natural gas is limited, as is the air, plant and animal life, land and our insatiable craving for more shows no signs of slowing. 

In the past, creativity and innovation have always resulted in new ways to get what we want – which is everything! – by finding new ways to exploit what we have. Mass food production through agriculture, mass consumer goods through industry, mass information through technology, mass communication through internet access; and all these are accompanied by exponentially increased resource use. This exponential harvesting of resources is not without cost to other earthlings, to the environment, and to our own peace of mind. 

So what’s next?

No one knows what the future will bring, so I advise, as always , to keep doing the things you’ve already been doing. If you’ve been following this blog series or taking our courses, you know that there are some things you can do to strengthen your position in good times and bad.

Everything You Already Knew

  1. Build up your savings account. Cash is always king and having cash or cash equivalent available when you really need it can change everything. 

    Traditional advice is to keep 3 to 6 months of savings on hand, but you may need more if it takes you a while to find work in your field. Also, remember, savings is not the same as investment and should be kept in a high interest savings account, not a stock or investment account that goes up and down with the times.
  1. Pay off consumer debt, preferably with a high interest work going down first. Income is always flexible, but debt never changes and it is always with you. The more freedom you have from consumer debt the better off you are.
  1. Diversify your earning, your education, and your skills. If changes are on the way, being ready to pivot is the name of the game. So make sure your skills and your contacts are up to grade. Invest in yourself, your health, and your earning ability.
  1. And as always, live your life! We can sit and worry about what might happen, or we can do the best we can, and just get on with it.

    Enjoy your family, your friends and your community, as best as you can. Positioning yourself for the best outcome is fundamental, but don’t obsess about the negatives. Let’s keep on living our lives and building those connections with other good people.

Best wishes,

Christine Williams
Money Tutor

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