Are we in a recession or depression? In the last two years, news outlets have said we are two months away from a recession. That kind of negative forecasting has sent more people to revisit what they went through in their last recession and how difficult it was for them then. When I refer to recession-depression, I am referring to the emotional discomfort and psychological impact that negative thoughts and feelings have mentally and physically.
For the average individual, a recession could mean delayed promotion, losing a job, or cutting back on expenses and luxuries. The Great Recession lasted from 2007 to 2009; the changes people had to make, such as downsizing and expense changes, have left most consumers with vivid memories of that time.
An economic recession is a term that describes a significant decline in economic activity that can last a few months to even years. A recession is measured after the fact, when economists look back at declining gross domestic product (GDP) data, increasing unemployment, and a reduction in consumer consumption, leading to reduced production.
How can you cope with the possibility of a recession around the corner? The best way to deal with a potential recession is to respond and not react. What does that mean? It means you plan for a downturn, don't let it just happen. Turn the recession into an opportunity to get ahead toward your goals. Statistically, a recession will happen perhaps two months or a few years from now. Either way, with the right plan, it does not need to derail your journey.
What can you do now to navigate a recession better?
First, make sure you are taking care of yourself. How can you care for your children, partners, clients, and boss if you need more energy and focus? It is challenging; make sure you have a schedule for a good night's sleep, make a decision to eat whole food, hydrate, and exercise regularly. You need a good foundation of health to perform during adversity.
Next, if you are worried about your employment, for you to network and be aware of other opportunities will always give you options in your future. You will always benefit from learning a new skill or hobby.
Financially, give your financial plan a recession boot. Pretend like we are in a recession for a week or two and cut back on your discretionary expenses like eating out and entertainment. See how that feels. You might be surprised that you still have as much fun even though you are not going out each weekend. Do an audit of your debt and ensure you know how much you owe, when payments are due, and how much you are charged. Keeping up with your debt payments is in your best interest if your income changes. Also, how much do you have in an emergency fund? Having 3 to 6 months of expenses in savings will help you navigate if you suddenly lose your job.
What savings and investments do you have? If you can avoid using long-term money for a short-term need, you will be better off in the long run.
Limit your time being distracted by screen time and aimless surfing. If negative news gets you down, perhaps opt-out and leave your phone or device at home when you take time off, whether going on a walk or a vacation.
We may avoid a recession altogether. The important thing is for you to focus on actions in your life you have control.
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