Turbulent economic times always have people wondering if they can recession-proof their incomes. They want to protect their families, their way of life and want to know they are going to be ok.
Fear is a strong emotion. It is an emotion that can cloud an individual’s judgement, taint their decision-making process and cause them to take extreme actions. The onset of this strong emotion can be easily witnessed in the business and personal world with the mention of one single word. One simple word that rolls off your tongue easily yet causes people to almost immediately begin to worry with fear and anxiety. The fear invoked by suggesting the economy may be in a recession or even just heading into a recession has vast implications for many people.
Concerns about employment, investments and the future are quickly brought to mind. These are the immediate and potentially long-term negative impacts a recession will have on all of these major items in most people’s lives. As these items are the building blocks of our lifestyle, it can be almost impossible to not have some level of stress about what the future will hold.
What can be done though to alleviate this fear that is created when a recession is upon us? What can the average individual do to ensure that their incomes, their futures and their lifestyle are recession-proof?
Definition of a Recession
Before we get into how you can recession-proof your personal income, let’s first make sure that we are clear what a recession means. By definition, an economy is in a recession when there is a decline in economic factors that lasts more than a few months. These economic factors can be but are not limited to employments statics, manufacturing production numbers, income of citizens, real estate transactions and wholesale-retail trade. If these economic factors are seen to decline for a specific economy for over two consecutive quarters, by definition that the economy is in a recession.
Necessity of Recessions
Looking at the history of financial markets for any economy will always show certain periods of time where the economy was in a recession. While recessions can last from 6 to 18 months, there are many factors that can cause an economy to enter into a recession, as well as many solutions that allow the same economy to grow out of the recession.
In the end, recessions are a necessity for the overall growth of an economy. Yes, that may sound counter-productive but what a recession ensures is the stability of the economy and allows for strong foundations to be built and allows the economy to grow.
The global recession that was induced in 2008-2009 was due to risky, and in some cases unethical investments. These investments were woven into many country’s economies and when the truth came out as to what these investments were, and the loss in value these investments immediately had, many nations faced grave economic times.
The positive factor was these investments were “flushed” out of the financial system and new sweeping measures were put in place to ensure this type of financial disaster did not occur again. The growth that was experienced by these investments was not only halted by the recession, it exposed weaknesses in the financial markets. As a result of the recession, the financial markets are now much stronger and have the ability to grow more rapidly and safely.
Continue reading how you can start today to Recession-Proof Your Personal Income.