Everywhere you turn, there’s talk of an upcoming recession. Quite honestly, it’s been that way for a couple of years now and it’s a topic I get asked about pretty regularly.
And I get it. The media and other big personalities have been using language surrounding a recession that stokes fear and causes a great deal of uncertainty.
“Could I lose my job?”
“Should I pull money from my investments?”
“Is it a good time to buy a house?”
All valid questions.
When it comes to a recession, the truth is nobody actually knows when regardless of how many little letters they have after their name.
And that uncertainty is probably what led you here.
So is a recession coming soon or not?
If you backed me into a corner and made me guess I’d lean more along the lines of a recession is coming soon based on some of the metrics and past indicators you probably don’t care about.
How soon though?
I don’t know, but I wouldn’t be surprised if it happened in the not so distant future.
I only say that because these things always happen. Recessions are just part of the game.
Let me give you an example. Since the year 2000, the Lakers and Patriots have gotten hot at times and dominated their leagues for a few years.
After a period of sustained success, some other team comes along and just unexpectedly kicks their teeth in.
But somehow, since the year 2000, these two franchises have always found a way to bounce back and win a few more rings after their down period.
That’s how investing goes. We’re in the dominating season right now, but we all know at some point our teeth are getting kicked in.
But history also shows that the bounce back potential after a recession is incredible. I mean look at this bull run we’re on after the last recession!
When the last recession hit, I was a skinny, 19-year-old kid living at home with my parents paying my way through community college.
I didn’t know a thing about the world or money for that matter.
I mean had I known at least a tiny little bit about money, I would have at the very least invested 50% of every paycheck into my company (Wal-Mart) stock when it got under $50/share. Today a share is over $110 meaning my money would have more than doubled by now. Sucks to suck, right?
But even though that was my only loss personally, I do remember the fear and outright pandemonium in the atmosphere as people lost their homes, jobs, and were selling their entire portfolio just to get by.
These days, I have a 6-figure job in a pretty volatile industry, a net worth in the 6-figures, and a wife and daughter living in a home that has a mortgage.
Basically, I have a lot more to lose this time around if stuff gets ugly.
Am I worried? I can honestly say I’m not and that’s solely because we’ve done a pretty good job financially over the years.
We currently have 8 months of expenses set aside specifically for emergencies, a profitable business on the side, owe nothing but our mortgage, and keep our living expenses low enough to survive on my wife’s teacher salary.
Should the stock market completely tank, we’ll continue doing what we’ve been doing:
Living below our means and investing the difference in index funds.
It’s just the Winning To Wealth way.
My only hope is that those of you reading this are taking proper precautions yourself.
Again, I don’t know if we’ll see the next recession in 6 months, 2 years, or 20 years. But I do know that it’s coming someday.
The best thing you can do for yourself and your family is to get prepared by making good financial decisions today.
Lower your monthly expenses, pay off your consumer debt, and save at least 6 months of expenses.
Once you’re done with that, consider investing in index funds no matter what the market is doing.
Why? Because what goes down, always comes back up.
At least in the stock market…
What are your thoughts on this potential recession? How are you preparing your family? Let us know in the comments below.