A recession is, in simple terms a slow down of economic activity and growth. Basically the money “stops” flowing and stock markets start to plummet. Although these are tough times for everybody around the world, there are some great money lessons we can learn from recessions.
Some might even say that a recession is a good thing, WHAT!?
Money Lessons We Can Learn From Recessions
A Recession Is A Good Thing?
First of all let me say that YES in some ways, a recession is a good thing! What I mean by that is that being pushed up against a wall gets people moving and inspires innovation. That’s when our brains function at their highest abilities! The most time when I was productive and focused is when I quit my job to start my business.
“When the going gets tough, the tough gets going.”
Successful business are built in tough economic times. Revlon, Fedex and Microsoft are all multi-billion dollar companies that were founded in harsh economic climates.
Invest in Yourself
Invest in yourself as much as possible. Don’t put all your trust in the company you work for! If a recession hits, it may just let you go. According to Wikipedia. In 2008 and 2009, 6.8 million people lost their jobs! Now that is serious!
I’m not saying you should abandon your job, just always try to put yourself in a better financial position, do some investments, learn how to save money and discover ways to up your income. Always invest in you!
You’re Not Untouchable
Everybody feels the pinch of a major recession.
Ok so the super rich don’t feel it like you and me do but most millionaire and billionaires have seen major drops in their income during the last recession. Now if the foundation of their businesses wasn’t built out properly, it might have bankrupted their business. Think Harold’s, Woolworths, Lehmans etc…
Don’t Bite Off More Than You Can Chew
We can NOT keep doing this! It all comes down to budgeting and self control. We really need to stop living beyond our means. I have suffered from this as well so I know how it can snowball down to it being a major money issue and I now realise it was my own over-spending habits that caused me to suffer sometimes. Even back in my teenage years.
You Don’t Have to Spend as Much
When you go through a tough financial situation. You cut your spending.. it’s the only natural solution. After you’ve come out of it all, you realise that you still went out, you still had food to eat, you still paid your bills, you still had fun. It’s just that you have actually SPENT LESS!
Somehow you survived with less than you thought was needed! If you think about it, it’s mostly “over spending” that leads to financial crisis not loss of income.
Don’t Trust Banks
As I have previously mention, I really dislike banks. I can’t imagine how a bank that registers trillion dollar profits a year for 20 years and when two bad years come they suddenly goes bankrupt! Anyways….
Ever since I was young I always hated banks. Even bank buildings! It’s just something that I can’t be bothered with! (Thank God for eBanking).
Don’t trust banks! This is just my philosophy though!
Every 50-90 years a major recession HAS to happen. When you consider the history of these things, you will see a pattern. It’s pretty much a roller coaster ride. What goes up must eventually come down and vice versa.
What we have to do is learn from our mistakes and hopefully not suffer too bad. Good thing about is not many people live as long to suffer 2 major recessions. At least not in their 20-50 age period when they are building up their net worth.
Budgeting Is Always The Answer
Whether you are a Fortune 500 company, a country, or a minimum wage worker. You need to create and stick to a budget! Budgeting allows you to keep track of your income and expenses, thus hopefully avoiding another crisis.
Try find some free mobile apps or online software that will help you do this. I suggest following this guide here to create a budget fit for your needs.
Thank you for reading folks!
I would love to get your idea about the subject. Do you think recessions are a “good” thing? Let me know by dropping a comment below!
Hi, I’m Chris Lee. In September 2013 I decided to quit my job to focus on building up my business. Glad to say that till now all is going well and I think I made the right decision but it’s only because I have learned how to properly manage my personal finances.