A Recession is Coming – 8 Things to Do Right Now!
Made you look!
Sorry about the headline, but we all have seen ones like this, and it’s instinctive to open them to make sure we don’t miss something important. Unfortunately, most of the supporting articles contain meaningless information based on speculative predictions of the future. Even worse, they are often littered with links to sponsored content trying to sell you something.
Instead of this, we’ll focus on the few things that really matter to your financial life, in good times and in bad. As you will learn in most “How to deal with stress” self-help books, you should focus on the things you can control and not waste time worrying about those things you cannot control.
Here are eight things you can control:
- Live below your means
- Make yourself valuable to your employer and/or your business clients
- Avoid debt
- Exercise
- Take a long-term approach to investing
- Do something nice for someone less fortunate than you
- Be cautious about investment advice
- Eat fewer carbs and processed food, and consume more fruits, vegetables, and protein
That’s it. With these eight things as your core, your financial picture may be better positioned over time. Let’s go a little deeper.
Live Below Your Means
You’ve heard it so many times that it may have lost its meaning, but this one thing separates most people with financial freedom from those with financial heartache. If you struggle with this, it is best to automate saving and investing. There are always people who can’t imagine living on 75-80% of their income, but there are plenty of other people who would be very happy living on 75% of that same income. A little perspective can go a long way.
Make Yourself Valuable to Your Employer and/or Business Clients
It’s too bad we don’t hear more about this in financial articles. One of the best ways to eliminate stress is to get to work. If a recession were to hit, and eventually one will, those most affected are those who lose their jobs. Many jobs will be cut regardless of what kind of worker you are, but many employers will need to choose between who stays and who goes. Even if your job is cut, an employer may go out of their way to help a valuable employee. We hear more and more from employers who have been underwhelmed by the work ethic of too many employees. With a mindset of giving more than you get, you will eventually get more.
Avoid Debt
Debt is the boulder that can financially crush lives. When people have too much debt, any disruption of income can be catastrophic. To avoid this risk, consider avoiding all consumer debt. In other words, don’t borrow for things that don’t give you a monetary return. This includes anything on a credit card that you cannot pay off that month, autos, boats, etc. A great goal is to be 100% debt-free, including your mortgage, ten years prior to retirement.
Exercise
All the money in the world won’t matter if you aren’t healthy enough to enjoy it. Get outside. Go for a walk. Do some push-ups and sit-ups. Take a yoga class. Your future self will thank you. Scientific data shows a strong link between exercise and not only physical health, but also mood and brain health. A healthy brain correlates to thinking straight and not making poor financial decisions while under stress.
Take a Long-Term Approach to Investing
Look at any historical graph of the stock market and you’ll notice that markets have historically recovered over long periods. Imagine if you could turn the clock back to the “terrible” times in 2008, 2018 or 2020. One of the first things you’d want to do is load up on cheap stocks. For some investors, maintaining a long-term approach may be appropriate depending on risk tolerance, time horizon and individual financial circumstances.
Do Something Nice for Someone Less Fortunate Than You
A big part of me thinks this should be #1 on the list. It does so much for the soul to go out of your way to do something nice for someone, especially a stranger, and get zero credit for doing it. None of us needs to look too far to find someone much worse off than we are. Again, nothing like perspective.
Be Cautious About Investment Advice
This seems to be something we say often but it’s because we regularly see terrible financial advice and how it can do more harm than good. Avoid “sponsored content” on the internet and any recommendations from financial salespeople. The best way to avoid salespeople is to understand how an advisor is compensated and whether they are required to act as a fiduciary in your bests interests.
Eat Fewer Carbs and Processed Food, and Consume More Fruits, Vegetables and Protein
Yes, we’re serious. Americans eat way too many carbs and processed foods. This leads to all kinds of health problems. Unlike the direction of the stock market each day, we can control what we eat. A healthy body is a great match with healthy finances.
The next time you see “click bait” doomsday articles telling you what you need to do for your financial future, save the time for a nice walk with someone you care about. It will go much further toward financial and physical health than reading about the annuities or gold you should buy ASAP.
This is intended for informational purposes only. You should not assume that any discussion or information contained in this document serves as the receipt of, or as a substitute for, personalized investment advice from Savant. Please consult your investment professional regarding your unique situation.
Kenneth R. Duetsch
Managing Partner / Financial Advisor
CFP®, CFA®, MBA