Are We Going Into A Recession
Recessions are kind of like hurricanes. Its hard to predict when theyll hit and how much damage theyll cause. But instead of downed trees and smashed houses, the damage from a recession usually looks like this: lost jobs, a tanking stock market and bankrupt businesses.
Now, you might not personally feel the effects of a mild recession . But a moderate or severe recession will definitely get your attention.
So, our two consecutive quarters of slightly negative GDP growth means were currently in a recession. But the numbers are very close to being positives, so it looks like this recession will be a mild onemaybe even a light rain instead of a hurricane.
Americas last recession came and went super quick in 2020 when the whole world shut down in response to the coronavirus pandemic. The National Bureau of Economic Research didnt even wait for two quarters of negative GDP growth to declare a recession.
But just like hurricanes, the key to surviving a recession is being prepared and not freaking out.
Recessions are a natural part of the economy, so its a given that well have them from time to time. Weve actually had 13 recessions since World War II, and the average length of each was about 10 months.3
No matter what the economy does, this economic trouble is temporary. If youre reading this, youve lived through at least two recessions. And you made it!
With that being said, its always good to be prepared for a recession.
Diversify Your Financial Portfolio So It Can Manage An Economic Collapse Or Depression
Throughout history, wealth and value havent just been lost it always transfers from one currency and financial system or asset to another. So to correctly prepare to survive an economic depression or collapse you can safely plan and diversify your financial portfolio in things that will hold value even if a currency or current systems devalue and fall apart.
The assets that will hold value even through a financial crisis, depression, or even a collapse have always been hard assets like commodities , land , real estate, and other items that carry bargaining power.
List of Assets to consider buying to diversify your portfolio:
- Crypto Currency
One of the most important things Ive invested in is my own financial education. The below video is part one of a series that first help me start to understand the economy.
The Hidden Secrets of Money: Part 1
Is A Recession Coming
Did you know that the times between a recession called an economic expansion have never lasted more than a decade in the United States since theyve been recorded? I did not know this until recently.
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Were in an expansion period now, and have been for about seven and a half years.
Whether current events cause us to decline quickly into a recession or we stay the usual course, theres a most certainly a recession in our future. How drastic that recession will be is to be seen, but thinking about how to prepare for a recession now could save you some headaches later. Im pondering out loud not to scare anyone, but rather to get us all thinking about basic survival needs and essential life skills.
Im hoping that youll share your insights and suggestions in the comments below, so we can all learn from one another.
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Learn How To Budget And Live Within Your Means
Living within your means is the key to building wealth. It also means you eliminate having to leverage debt to live your lifeno more using credit cards to pay your bills.
Wondering how to prepare for a recession and live within your means? Learn how to budget and determine what budgeting style works best for you. Your budget will help you track your expenses compared to what you earn and highlight areas you can cut back on.
Your ultimate goal should be to widen the gap between your income and expenses as much as you can. You do this by increasing your income and reducing your expenses. The money you have left over is money you can use toward the things that really matter to you, like your savings and investment goals.
Who Does A Recession Impact The Most
Educate yourself about what a recession means for you if you are affluent, have cash to invest in real estate, the stock market or faltering business, a recession can be a great opportunity to buy low, and hopefully later sell high.
For most people, a recession is a time of anxiety as they worry about losing their jobs or face unemployment, which lasts longer than average during a recession. Prices on everyday items tend to go up, while real estate markets go down.
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Contrarian Idea: Take A Risk
Im not normally one to suggest taking big risks. That said, I cant deny the fact that many of the most iconic and successful companies were started during market downturns. Apple, Microsoft, and General Electric were all created during tough economic times. While others are too skittish to take risks, you may view a downturn as an opportunity to make investments. Asset prices are depressed and markets are volatile. Depending on your risk tolerance, this may be a perfect time to roll the dice. The bigger the risk, the bigger the reward. Just know that the odds of success are against you.
Learn To Make Do With What You Have
Lifestyle creep is real and we all know the old adageThe more you make, the more you spend. Unfortunately, we live in a society where instant gratification is more the norm than the exception and with the availability of credit, its no wonder that Americans are spending way more than they make! I hate to be the bearer of bad news, but learning how to live below your means is going to be key in knowing how to prepare for another Great Depression. As Thomas Jefferson once said, Never spend your money before you have earned it.
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Stock Up On Precious Metals
For many investors, precious metals serve as an insurance policy against economic collapse. When the value of the dollar goes down, the value of these precious metals goes up. Thus, if you put at least a portion of your money into metals such as gold and silver, youll have a lot more value to your name when an economic disaster strikes.
How To Prepare For A Depression
If youve got money saved up, then youre doing great. But if youre like most of us, youre just barely getting by.
Thats why you should prepare for depression.
I dont selfishly mean this. Im not talking about hoarding all the cash you can find so you can live off the interest.
Im talking about preparing your family for a situation where you will have to tighten your belts.
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How Is Depression Treated During Pregnancy
Its best if a team of providers treats your depression during pregnancy. These providers can work together to make sure you and your baby get the best care. Your providers may be:
- Your prenatal care provider. This is the provider who gives you medical care during pregnancy.
- Your primary care provider. This is your main health care provider who gives you general medical care.
- A mental health provider. This may be a psychiatrist, psychologist, social worker, counselor or a therapist.
- Your babys health care provider
Depression can be treated in several ways. You and your providers may decide to use a combination of treatments instead of just one. Treatment can include:
- Counseling, like CBT and IPT
- Support groups. These are groups of people who meet together or go online to share their feelings and experiences about certain topics. Ask your provider or counselor to help you find a support group.
- Medicine. Depression often is treated with medicines called antidepressants. You need a prescription from your provider for these medicines. You may be on one medicine or a combination of medicines. Dont start or stop taking any medicine for PPD without your providers OK.
- Electroconvulsive therapy . In this treatment, electric current is passed through the brain. This treatment is considered safe to use during pregnancy. Providers may recommend ECT to treat severe depression.
Build Relationships With A Community Of Self
Find like-minded, self-reliant people to build up a local community that can work together during times of crisis. This is often overlooked but will make all the difference if there were to be an economic collapse. I am a part of a great group of people in a rural community where my parents live as well as a group of people in my church that together bring skills to the table that will make surviving any kind of crisis or collapse very manageable.
In addition to a local community, it is a great idea to join social media groups such as this and/or this preppers group on Reddit.
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Contribute More Towards Your Emergency Fund
After cutting out unnecessary expenses, increase your savings budget as much as you can. Ideally, 20 percent of your income should go to your savings, and 30 percent to extra expenses like your subscriptions and memberships. After slimming down your extra expenses, set up higher automatic payments to your emergency fund. If you lose your job or have car troubles, youll have your emergency fund there to help out.
Recession Vs Depression: Whats The Difference
A recession and depression are commonly confused. Think of it this way: a recession is a short-term regional economic downturn, while a depression is a more severe long-term regional or global economic downturn.
- A recession shows a negative turn in the economy, primarily affecting employment and production. This means the average household income and spending decreases across a country. In a recession, these spending patterns continue in one country for six months and up to 3.5 years. In the event of a recession, your family may hold off on making any large purchases, like buying a new car or house.
- A depression is a widespread increase in unemployment and a pause in economic activity across a region, and it can even spread globally. This includes a decrease in construction, world trade, and capital movements affecting the business cycle for three or more straight years. For instance, the Great Depression lasted almost a decade with ongoing negative growth across the globe. During that time, many families were unemployed for years on end.
Given the different ramifications of an economic downturn, either type can be detrimental to your lifestyle. Not knowing the length or long-term effects of a recession or depression may increase your anxiety. To get ahead of financial emergencies, its helpful to always be prepared. Read what normally happens during a recession and how to prepare in the sections below.
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Readers Respond: How Should We Prepare For A Greatest Depression
If we could talk with survivors of the first Great Depression and ask them, If you could go back to 1925, how would you have prepared for the Great Depression, I wonder what they would say.
Were preparing for something on a worldwide scale, so I asked Survival Mom readers this question: How should we prepare for a Greatest Depression? Here is a curated selection of those responses.
What skills do you recommend to survive a depression?
Originally posted January 27, 2016, with contributions by Lisa Todd updated by Survival Mom editors.
Tips That Will Help You Prepare For The Coming Economic Depression
What do we need to do in order to prepare for the coming economic collapse? Are there practical steps that we can take right now that will help us and our families survive the economic depression that is approaching? As the publisher of The Economic Collapse Blog, I get asked these kinds of questions a lot. Once people become convinced that an economic collapse is coming, they want to know what they should do. And so in this article I am going to share some key pieces of advice from some of the top experts in the entire country. If you are not convinced that economic disaster is on the way, this article might not be for you. Instead, I would encourage you to go to my website where you will find more than 1,200 articles that set out the case for the coming economic collapse in excruciating detail. For those of you that are interested in getting prepared, I apologize in advance for the outline format of this article. To examine each of these points in detail would take an entire book. In fact, I am the co-author of a book that will soon be published that discusses many of these things in great depth. But you dont have to wait for a book to get prepared. Mostly, it comes down to common sense. In this article, I share 89 common sense tips that will help you get prepared for the coming economic depression. Hopefully a lot of people will find these to be very helpful.
This first set of tips are 11 things that I strongly encourage my readers to do
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Keep A Rainy Day Fund Out Of The Bank
During the Great Depression banks shut down and people were left with what they had available in their houses. Nowadays currency is even more virtual and we keep large amounts in the bank.
A lesson from the great depression is to always keep a small rainy day fund out of the bank in case of an emergency. Even if its just a couple hundred dollars in emergency savings or the key to a cryptocurrency not controlled by banks, any type of rainy day fund can make all the difference when the banks shut down. Banks shutting down may seem like a fictional reality but it can happen.
Bulk Up Your Emergency Savings
As you work on recession-proofing your finances, it’s very important to have emergency savings in place. In a recession, having an emergency fund can save you a lot of stress. It can also help you avoid becoming financially over-extended or having to leverage debt just to get by. It’s so important to save money.
To start, you want to put aside 3 to 6 months of your basic living expenses in an emergency account in the unfortunate event that you become unemployed.
And since recessions can be pretty unpredictable, aim to boost your emergency savings to 12 months of your basic living expenses. T
his will give you ample time to find a new job. But remember, jobs can be harder to come by in an economy experiencing a recession.
Keep in mind that your basic living expenses are the essential things you need to survive food, housing, core utilities, and transportation. Building your emergency fund is one of the most important steps when preparing for a recession.
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How To Survive A Recession: 10 Steps To Take Now
Now that were likely in a recession, many people want to know, What should I do during a recession?
If you still have a job, heres what you should do right now:
If you have lost your job and don’t have a financial cushion, here is what you can do now:
Frequently Asked Questions About Depression Economy
Q: What kind of changes can we expect in the Depression Economy?
A: There will be more unemployment and layoffs, so its essential to develop good coping skills. If you feel like youre not going to be able to pay your bills, cut back on spending and start living more frugally. Dont fall into a downward spiral of expenditure. Save money for emergencies and take time to find creative ways to earn money.
Q: Is there anything I should be prepared to do in the Depression Economy?
A: Being prepared means knowing yourself. Do you have a plan B? Are you able to cope with stress? Think about what you would do if you lost your job or if someone in your family were ill. Its essential to know how youll handle financial problems, but you also need to understand how youll cope when you lose your job.
Q: Where should I start looking for opportunities in the Depression Economy?
A: You may have to start looking outside your current profession. You can make yourself marketable by networking and updating your skills and knowledge. Look into volunteering at organizations that provide services for those in need. Also, consider becoming self-employed, such as owning a small business.
Q: What should I do about my finances if Im not making enough money?
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