This piece is part of my 2016–2026 archive migration. Some original formatting, content, and external links may be missing, changed, or not be optimized.
It’s possible to be a happy person during tough financial times
But as well all know, recessions aren’t fun. Some of you may have lost your job, income, insurance, or benefits. Others are still recovering from the last recession. And then some of you are racking up tremendous debt because you don’t have any income, which continues to exasperate your financial situation.
What happens after a recession? The economy recovers to some degree, but sometimes the damage to our financial situation during a recession is so detrimental it can take time to recover.
10 Strategies To Prepare For & Thrive In A Recession
In this article, I will review ten strategies to help you prepare for and thrive in a recession because, let’s face it, eventually, another one is coming after this one.
How To Shield Yourself In A Recession: Diversify Your Income
An excellent way to shield yourself from a recession is by ensuring that you’re financially independent and not entirely reliant on one source of income; this is a critical component of preparing yourself for and thriving in a recession.
The Most Common Effect Of Recessions: Job Loss
One of the most common occurrences during a recession is job loss, which equates to income loss.
Most people bank on their one job to cover their expenses and provide for them financially; they underestimate how little control they have over maintaining their job – even if they’re top performers.
You will never have financial security if you work for a traditional employer.
Job security doesn’t exist. As long as you’re working for someone else, you can guarantee that you’ll likely experience a job loss at some point – even if that means you willingly leave a company.
Diversify your income. Don’t rely on one source of income. At a minimum, always have three sources of income. I don’t recommend two anymore because when you have three income sources, you’ll still have two left if you lose one. You can recover the third one while maintaining your other two income sources.
Diversify your investments. We’ve all heard it before: don’t put all your eggs into one basket. Invest in stocks, ETFs, crypto, REITs, start-ups, private companies, mutual funds, etc. Focus on investing in your areas of expertise, or educate yourself and learn about which areas you should invest in that make the most sense for your financial goals.
Emergency fund. The emergency fund will shield you from tragedy if you lose your job or leave a job. I left a job once because it was no longer a good fit, and I was out of work for six months. There is no way I would’ve financially survived that if I didn’t have an emergency fund. At that time, I had a year emergency fund, so I could take my time with the application process, pay all my bills and expenses, and not financially rely on my partner.
Budget. It’s not uncommon for people to underestimate the power of a budget. Magical things happen when you know what you’re bringing in and what is going out. You start saving more money, spending less money, and investing more.
Invest. Investing is the easiest way to slowly (or quickly) build long-term wealth. During any recession, remember to continue investing; this is when investments are on sale. Buy cheap during recessions and watch the rewards explode once the economy recovers.
Eliminate Debt. During a recession, you might adopt a lack mentality and invest little effort into eliminating debt, but this is the time to put a little extra towards investments and eradicate debt. Credit card debt is the most expensive kind of debt. If you can, try to avoid racking up this type of debt at all costs unless you use credit debt to your advantage, which is a different conversation.
Downgrade your lifestyle. Move in with your folks, live with friends, get some roommates, start Air BnB, move to a smaller residence, or get rid of your residence altogether and live in an RV or trailer. Do whatever works for you and your budget. Sometimes lifestyle changes are necessary to reach your goals.
Start your business. If you don’t have a side hustle or small business, this is the time to create one. I was listening to the School of Greatness podcast today, which cited how many millionaires are born during recessions. Out of necessity, people create to build something for themselves that a traditional employer could never offer them.
Scale your business. If you already have a side hustle or small business before the recession, this is the time to learn how to scale your business. Dig deep and invest in education to scale your business, increase your leads, and boost your income.
Educate. Acquire knowledge and execute. Expose yourself to new business and financial ideas, strategies, and habits so that you can come out of recession as a more financially savvy person.
This content is for informational purposes only — not professional advice. Consult a qualified professional before making any major decisions.