We see the country freak out every time stocks quiver, but we know the deal– the overall (global) trend is in an upward market trajectory. Still, weathering the hills and valleys can be a bit unnerving, particularly in the tougher times. So what steps can be taken to prepare yourself, your family, and your finances for an economic downturn?
- Return to the basics– turn off the screens, pick up a book and get emotionally prepared to weather the storm. Get intentional about what you’re introducing to your life. Come off of social media to nix the fear of missing out and ingrown envy of other peoples’ lives. Read literature that aligns with the life you’re intending to live (see our suggested reading list for books and blogs) and listen to podcasts that grow your knowledge. Get creative and not only settle into your feelings but let them out. Bottling up emotions isn’t only unhealthy, but it’s also unhelpful in terms of you reaching your goals. Get physical– acknowledge the mind-body-environment connection and invest in yourself. Make yoga and/or exercise and meditation part of your daily practice and keep your space clean, uncluttered and reflective of the space you need to organize your thoughts. Finally, get your nutrition together. Return to the roots of healthy and purify what goes in so that you can function at the height of your design.
- Save so that you’re a little more liquid than you would normally be. The nature of investments is such that anything invested (stocks or funds, etc.) are at risk for loss. By staying liquid (not pulling money out of the market, but ensuring that you have enough in reserves to survive in the event of a downturn. This may man padding a 9-month emergency fund to meet a 12 or 24-month size goal until the market uprights.
- Look for additional ways to save money in your already frugal lifestyle. This may mean properly inflating and balancing your tires, turning down your thermostat and picking up a sweater, or renting out your driveway, she shed, or spare bedroom to earn some extra income. This may also mean sacrificing your weekends to pizza delivery to earn some extra cash.
- Pick up a side hustle (or three) to fill in the gaps in your schedule. This professional diversification is the key to your financial success. You get extra points in your side hustle is one that relies on trade, non-academic skill, or something that would be otherwise indispensable in the event of a break of the ivory tower: if or when the overvaluation of intellectual fortitude crumbles. Return to the basic skills: start a garden with heritage seeds (non-GMO); learn to hunt or learn to feed yourself on what you can forage and grow.
Bottom line, make your life as sustainable as possible so that you have the best chances possible. This principle is also true for the FIRE movement., but the difference with FIRE is that you have an incredible amount of time to fix whatever issues may arise. If early retirement doesn’t make sense, after all, you can pick work back up at 50. In a downturn, you may not be able to do that, but you can make it such that your core survival needs are as insulated from environmental changes as possible, including food, shelter, clothing and related costs. Don’t depend on a job or one stock to provide these for you, because if you lose your job or if food costs skyrocket, how will you eat? How will you heat your home if gas is no longer a possibility? For those things for which you need cash, do you have enough to get you by?