Recession 2020: How To Calmly Protect Yourself In An Economic Crash

During these unprecedented times — when stock markets are dropping sharply and many of the world’s currencies are incredibly volatile — you have got to protect yourself and your family.

Prepare rather than panic. Go easy on yourself. These black swan type events happen once in a lifetime. If you can survive this (and you will), you can survive anything. This is a test, and you’re already doing exceptionally well.

Having lived through a few recessions and worked in finance for many years, I know there are a few things you can do to soften the blow of the next potential downturn.

Assume You’ll Lose Your Primary Source of Income

Complacency is a killer in a recession. No matter how safe you think your job is, anything could happen. The key is to be proactive and back yourself.

If the worst happens, what can you do about it? Make a list. What are your second and third alternatives if your primary salary goes away?

Sharpen up your business network and reconnect with colleagues. Use creativity, not fear, to guide your decisions. If your main source of income dries up, how long can you last? What could you cut back on?

Everything will probably be fine for you but consider the alternative and run the scenarios calmly. Hopefully, you’ll be pleasantly surprised with the results. If all is well, you should have enough to make it through this short-term situation.

Recessions build your mental toughness, and that’s a gift.

Create a Second Stream of Income

If you’ve ever thought about blogging, the time is now. Don’t hold back any longer. You can get paid to write or start a website.

Stop dreaming and take the plunge. Start to build your side-hustle now so that if you need a second income, later on, you’ve already got a few runs on the board. When I first started blogging, I didn’t need the money. Last year, when I became unemployed, the money from writing was an unexpected blessing.

Anyone can write or create an internet business. The time is now.

Plug the Holes in Your Expense Bucket

Many of us waste our money without even realizing it. This is the time to tidy up our spending habits.

Home-cooked meals are perfectly fine. Time with the family at home is cool, and you don’t need a big expensive holiday.

All of those subscriptions are probably not needed either. Keep the ones that help you learn and grow and reassess the rest.

Forget Keeping Up With the Joneses

Sell the Mercedes if you’ve got to. Put the kids in a regular school with minimal fees if you need to.

Nobody cares how rich you appear.

You’ve got no image to maintain. The people that care about your image and status are shallow.

You don’t need shallow people in a recession; you need real friends who love you no matter what. Trade the fakery in for cash to keep you going during these difficult times.

Keep a Larger Than Usual Buffer

This is the time to deleverage. If you have lots of debt, make it a goal to pay some or all of it off. If your mortgage has very little equity, then downsize to take a load off. If you usually save 10%, then save 20%-30%.

Build a buffer in every area of your life. Too much debt during a recession can wipe you out. When the market goes down, the banks can come for their money, and you’ll feel heaps better if you’re ready.

Don’t Sell Anything You Don’t Need to Sell

Recessions can cause people to panic sell.

When you sell your investments/assets during a recession, you lock in any losses. Your shares only lose money when you sell them. Your home only goes down in value if you sell it.

Think carefully about selling your hard-earned assets and look for other areas you can cut back on. When the market recovers — and it will — you can sell anything you feel you must, then.

Double Down On Normal Habits

Habits are like oxygen in a recession. They keep you regular and create a level of normalcy when times get tough.

• Keep exercising.
• Keep reading and learning.
• Keep socializing with friends.
• Keep meditating and breathing deeply if you can.
• Keep posting on social media and sharing your story.

It’s not the time to give up the habits that made you the person you are. If anything, you want to be adding in a few new practices that serve your goals.

Be Kind to Yourself

The recession is not your fault. It affects everybody, and you’re doing the best you can with the cards you’ve been dealt.

There is always something you could have done — but hindsight is often a colossal lie, and you can’t go back and edit history.

You made the decision you made, and now you’re here. What are you going to do about it? Stand still and lose or get back up and win again when the market recovers? The choice is yours.

Give yourself a break and focus on what you can control. Some of the best businesses and thinkers were created during recessions. You can be in that category too when you’re kind to yourself.

Pass it On

Once you have protected yourself and got back up from the shock of the recession, it’s time to double down and help others.

Recessions can test people, and not everybody has learned the skills yet to deal with these uncertain times. For many millennials, this is the first recession they have ever faced. Losing their job could be quite scary for them and seeing their savings evaporate could eat away at their self-worth.

You have the power once you have sorted out your situation to step in and help those in troubled times.

You can teach/coach masses of people using social media platforms like LinkedIn. Think about all you have learned from this current economic cycle and any prior recessions you’ve experienced. How does that help us?

A recession can either break you or remake you. You can either fall down and not get back up, or grow from the experience. This is a test, and you can pass with flying colours. You were born to thrive, and this period in human history will pass.

In the meantime, do what you can to control your financial situation and learn as many lessons as you can along the way. Lead with humility and help others by utilizing the power of courage.

The recession is going to make you a better human being in every way.

Originally published at https://mkeshav.com on April 7, 2020.