*This is a guest post by Daphne @ Joyful Days.
The last recession, which in my part of the world happened around 2002, was worse for me than the current one, even though all the statistics say this one is worse. The reason this time is much easier for me is that I learnt enough from the last one not to get hurt again. I got richer from the last recession, and you can get richer now too.
Make this recession pay you by making sure that it’s the last one that ever costs you. I won’t try to convince you that a recession is a good thing. For many people, it is not. The best thing you can do is to make this the worst one you’ll ever have. If you make the most of this unsolicited opportunity, this may be the best recession of your life.
1. Understand that the first time is the hardest
The next time a recession comes along (and it will) you will be no stranger to it. We do not fear what we know. The second time round, your coping mechanisms will be in place. Use this one to practise a few: play computer games all day to escape the despair, curse and moan to your best friend all afternoon over tea, go for long runs… do whatever it takes. Next time, you’ll have a whole bag of tricks to employ once you see tough times coming.
2. Learn some financial survival skills
The last recession came when I’d just given up a full-time income to start freelancing. Some months I didn’t have enough income to pay the bills. I had to risk my savings in ‘punting’ stocks, watching prices like a hawk, buying and selling within daily or weekly fluctuations. It was unnerving, and I wouldn’t do it now, but at the time you just do what you know to do. If you survive once, you’ll know you can survive again. This confidence itself is priceless.
3. Change your financial habits
I decided I didn’t want to live on the red line ever again, and trained myself to live on only half my income, saving the other half. This means that you can lose half your income and not worry too much. The savings over the years also allow you to make investments which generate a cashflow to back up your principal income source. If you manage this well, you will sail serenely through the storm of the next recession.
4. Build safety nets
Identify where the recession hurt you most. Was it most painful to cut back on your insurance, sell your house or car, or forego the family’s annual holiday? Start building safety nets for these areas so you won’t be caught offguard again. You may want to switch to insurance plans or mortgages with flexible payment schedules, or start putting aside part of your monthly income in a separate holiday account to protect the parts of your life that are most important to you.
5. Be thankful that it’s only temporary
For most of us, the good times will eventually be back. I hate to pull this “think about the hungry children in Africa” stunt but it is true. Some people will live in need all their lives. Some fathers have already sold a kidney so their families can eat. Some mothers will send another daughter into prostitution. If you have phone or electricity bills to pay, you are already better off than many people. Be grateful for what you have.
So there you go. This recession can make you richer in so many ways: in experience, in financial skills, in money habits, in safety nets, in gratitude of spirit. May this recession be your worst one ever, and may it be your best one too by helping you get richer!
Daphne has a lifestyle her friends envy. She is practically semi-retired in her 30s and just loves her life. Her blog Joyful Days was started as a challenge by a friend to help others find and live the life of their dreams as well.