recession

Recession Coming?

/ Investing / By

Well, the market has been moving down for weeks and it’s now into bear market territory.  There is a lot of talk about a recession occurring soon.  There is inflation out of control.  Gas prices and grocery prices are skyrocketing.  So, what is a person to do in these troublesome times?  Is a recession coming and what should you do?

Go into protect mode during a recession

Emergency Fund

Now is the time to reflect upon your own circumstances and evaluate carefully where you are financially.  Each person’s financial health is very individual so it’s time to take note.  Do you have cash reserves for emergencies?  Do you have that 3-6 month emergency fund fully ready in case you need it.  If not, now is the time to use extra cash where you can find it to build up some reserves.  If you’re set, you’re probably feeling a bit less pressure because you’ve prepared now that things are tightening up.

Expenses

Think about what you’re spending your money on.  My guess is, you’re already doing this because our economy is forcing us to.  We’re all aware that we’re spending much more in gas and groceries.  But look at other unneeded expenses and see where you can do without for the time being.  This doesn’t mean that you must give up all your pleasures forever, but going into protect mode, saving all extra cash right now may be the prudent thing to do.

Job

Now is the time to make yourself valuable to your employer if you have one.   In certain industries, they may be laying off workers.  For instance, a lot of the “crypto” firms have laid off thousands because of the bear market now in the cryptocurrency market.  Other areas of our workforce are being affected as well.  So, learn a new skill and prove your worth.  For many of us, our security – as well as our ability to invest – rely upon these employers.

Go into take advantage mode during a recession

Investing

If you’re financially stable with reserves, now is the time to start looking for bargains in both the stock market and cryptocurrency markets.

Remember, however, that the “bear market” we just entered is probably just getting started.  No one knows the future, but you can take a historical lesson to heart.  In every past bear market, there is a season of recovery and expansion.  Stock prices that have been cheap because of a bear market increased a lot over the subsequent years.

So, for now bargain shopping great stocks is like finding your favorite items at the store for 30%+ off.  In some cases, stocks are down over 70%.  Just do your homework before buying.  For myself, I’m a buyer if the fundamentals look good and I believe this company will be around in the next 5-10 years.

Job

With uncertainty also comes opportunity.  In some industries, there are shortages you can take advantage of.  For instance, in my career (medical) there is great need.  There are opportunities to advance if you’re prepared.

Learning what’s important to you

What do I mean by this?  When things get hard, it’s easier to reflect on what really matters to you and your family.  Right now, there is a lot of national news concerning finances.  It seems like everyone is having a hard time.  So, this is a great time to get back to the basics, to nail down what’s important to your family.  Then it’s time to concentrate on protecting and advancing those ideals.

There will eventually come a season of prosperity again.  The stress will lighten, it will be easier to spend.  But having identified what’s meaningful to your family you will be better prepared for the next crisis.  You’ll be able to enjoy the good times but be ready for the negative times.

Summary

The last couple years have been a struggle for most people.  We’ve had to endure more than we’ve ever planned for.  Financially, things are definitely tough.  Most everyone’s 401(k)/403(b) are taking a hit.  Inflation is eating away at everything.  We have less money to spend and for some they’re losing their jobs.

So, protect what you have.  Be prepared to make some tough decisions and weather the storm for now.  Eventually, we’ll duck from cover and find our season of prosperity again.  By then, we’ll be wiser and better prepared for the next tough season.

In the meantime, we can take advantage of opportunities around us.  The decisions we make today will be the reason for celebration later on.

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David the Wealthy RN

David is the creator of The Wealthy RN. Although I'm not your financial advisor [nor offering financial advice], I can share what 20 years of hard financial lessons have taught me: how to effectively budget, save, and invest creatively. Read my story on how I went from tens of thousands in debt to accumulating hundreds of thousands of profits.

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