Recession by any other name…
Recession is coming. Whether it’s called ‘recession’, ‘economic downturn’, ‘bear market’, or another politically charged term, it’s recession. It may not fit the exact measures of a recession by economists’ terms but it will be a recession none the less. So how do you practically prepare for recession in 2022? How do you recession-proof yourself and live to see another day? I believe it boils down to three things: stock up on supplies, working your job & hustle, and assessing your spending – when you do this you can also earn an unexpected bonus: then be in a position to help others.
Let’s tackle supplies first. It’s nearly Summer of 2022. People are looking to get out, go on vacation, and travel. Despite the price of gas heading to $6, people are willing to pay the $6 and when you pay a market price, you are determining that price by the act of payment. So people are casting an economic vote for high gas and traveling to different states. No judgement here just economics distilled to it’s simplest. What do you do while people are traveling to other states? You turn your attention the other way – where no one else is looking.
While people have their heads turned looking at California, Florida, Texas, New York, and other travel destinations, you can turn your head the other way to look at local stores and warehouse clubs or websites like Amazon for the things you need while they are in good supply. But how do you decide where to go? It’s simple – it doesn’t matter. The first thing you have to work on is your mindset.
What is the mindset for preparing for a recession? It’s simple. It’s planning. How do you plan? You take time to walk around your home and write down the various things you use and need. Then you write down how often you need them and how long you want to plan for. For instance if you eat chicken soup out of a can once a week and you want to plan for 6 months then you would need 24 cans of soup. Start collecting this information.
Once you have collected this information then you put together a table and begin to find where the items are sold at the best price and begin to slowly accumulate. It’s not a rush and it’s not hoarding. You want to respect other people’s needs for the same product. You simply want to be prepared. Once it’s all laid out in a table, then it becomes irrelevant where you go to get it – you just get it while everyone else is on a ‘summer vacation mindset’.
|Item||Quantity Used Per Week||Length of Recession (months)||Total Needed||Where to Find.|
So what happens if a recession doesn’t happen? That’s why you don’t hoard – you are simply prepared for the next few months with things you already would need and begin to consume them as normal. You didn’t spend any more money than you normally would have, you just spent it in advance. Enjoy the windfall of extra cash you aren’t spending. But if it does happen, you are prepared. It’s a variation on “Pascal’s Wager” (How do I believe if God exists or God doesn’t exist – if one behaves “well” the loss is minimal if they are wrong and God doesn’t exist but if God does exist the reward is bountiful). In a normal situation cash is king but during these times certain supplies are king – all the money in the world couldn’t get you a roll of toilet paper in 2020. You have to keep cash on hand but at the same time convert some assets from liquid cash to personal commodities. This is how you handle the consumption part of the equation but what about the funding side of the equation?
What about the funding side? It’s a coin with two sides – funding and spending. It’s important before a recession to start making sure you are working hard at your job, develop a hustle, and keep working both while reducing spending. Make sure you job is something you can endure doing during a recession. Develop a side hustle whether it’s rideshare delivery, rideshare driving, a flea market table, or other such enterprise. But can you out-earn excessive spending? No. So how we do address the other side of the coin?
You have to start cutting back early on things you do that cost money. What you spend and what you earn are two sides of the same coin. If you cut back what you spend it’s the same as earning that same amount of money as extra. It’s important to have a mindset that you can’t always do what you want or have what you want when you want. You may have been able to go for a leisurely drive in the past or make an extra trip to the mall just to hang out with a friend who is working there but you have to make some hard decisions. It will be hard at first but it takes 21 days to develop a new habit so the first 21 days of any new mindset are the hardest. Day 1 will be harder than day 22. But don’t spend your savings. You are basically moving money from the “Spend” column to the “Earned Column”. It’s like getting a raise or working more hours without working more hours. It’s not forever but it is for now. It’s all a mindset which can lead to so much more.
|Spend||Earned||Now Spend||Now Earned|
|$15 weekly movie||-$15||0||$15 saved|
|$100 extra trips||-$100||0||$100 saved|
|$25 massage||-$25||0||$25 saved|
|$180 Starbucks (daily over 30 days)||-$180||0||$180 saved|
|$45 eating out||-$45||0||$45 (now $365 total)|
When are in the right mindset after day 21, you are then in a position to help others – you’ve just opened yourself up to so much more. Perhaps you have a little extra money saved or you have an extra roll of paper towels. Those can be given away to someone you know who is need. With a little bit of preparation you are not just weathering a storm, you in a position to provide aid and comfort to others. It all begins with a mindset of preparation.
Whether it’s called ‘recession’ or some other word, it’s important to prepare for economic downturn. You can assess your supplies, work your job / hustle, and review your spending to find ‘extra money’ that you don’t have to spend that can go from the spend column to the earned column. When you do these things, you will recession proof yourself, live to see another day and perhaps help someone else do the same.