When I was 12 years old I had a very unique job. My Dad had a business that distributed movies to elementary schools. The movies were on 16 mm film which was prone to breaking so when they came back rom the schools, my job was to scroll through them and repair any damage. It was a great job that put a lot of nice spending money in my pocket.
Recently I stumbled across the logbook I used to keep track of my earnings from that job, which also contained a ledger on my spending. My logs showed that I promptly spent all that I made, not being too concerned because there would always be more. At least that is what I thought until one day my Dad informed me I would not have any work for a few months due to the summer break. I was devastated. I had so many plans for the money that I had come to assume would always be there.
Some say a recession is only a recession when it hits home. Therefore, this experience qualified as my first personal mini recession. My summer spending plans had to be trimmed back as I learned the sad lesson of not preparing for economic slowdowns, even at 12 years old.
In 2008 our nation went through a terrible recession. People lost their jobs, their homes and their lifestyles. It is easy to find blame for the sorrow of that recession; poor government policy, Lehman Brothers, irresponsible bank lending, and others but really when you think about it, the bulk of the tragedy was self-inflicted. Too many had borrowed too much and were living at the edge of their means. When a setback occurred, it was greatly exaggerated because, as a people, we were not prepared as we should have been. If we had spent less, kept mortgages at reasonable levels, and saved a little better, the recession of 2008 would have been far less painful.
Some are beginning to worry that another recession may be near. Recessions have always been a normal part of the economic cycle and some leading indicators are beginning to point to the next one, but I do not fear recessions. In many ways they can be good medicine for an economy that may need a reminder. They force families, businesses and governments that have gotten financially careless to re-evaluate their spending and streamline their operations. Like an occasional illness, a recession reminds us to take better care of ourselves when times are good.
When the next recession comes there will be those who are unprepared who will blame economic events for their sorrows. There will also be those who have managed their money in such a way that they are able to ride out the slowdown and come through it in fine shape. The next recession will even provide opportunities, as the last one did, for those who are financially prepared to take advantage of it. Do not fear a recession, just
fear being unprepared for one.
Hi, I'm Dan. I'm a CFP® Professional.
Securities and advisory services offered through Commonwealth Financial Network®.
Member www.finra.org / www.sipc.org , a Registered Investment Advisor. Wyson Financial, 1173 S. 250 W. Suite 505, St. George, UT 84770.
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