ARE YOU PREPARED FOR A RECESSION?
Author: Patrick Blair
The news media has been reporting on an impending recession as if it is a foregone conclusion. We’ve experienced yield curve inversions, mass retailer bankruptcies, slowdowns in manufacturing and auto sales, drops in housing prices in some markets, etc., etc. Will the U.S. and world economies imminently plunge into a recession? Who can really know?
What I can tell you is that most people in the U.S. are not doing well financially. Even after the longest economic expansion in U.S. history, a recent survey reveals the top priority for nearly 60% of people is paying down credit cards or catching up on bills.[1] Put another way, even though things have been relatively smooth for a long time, nearly 60% of the population is not ready for a recession.
It looks like the majority of the country is falling into financial trouble without a recession. Just imagine, if 60% of the populous is struggling now, what will happen if a nasty recession is really around the corner? Even if you aren’t in credit card debt or behind on your bills, how are you doing with your emergency fund?
Where I Am at with My Emergency Fund
I’ve had my fair share of trouble with debt and after getting serious about it, it took me almost 10 years to pay off. To be honest, it’s taking me even longer to build up an emergency fund. Personally, I’m having a harder time saving liquid assets (easy to access funds) than I did paying off debt. Maybe that’s because it doesn’t seem as exciting to save as it does to pay off.
What Advice Can We Get from the Bible?
1) Don’t Ignore Danger
The prudent see danger and take refuge,
but the simple keep going and pay the penalty. (Proverbs 22:3, 27:12)
If it looks like there’s a storm ahead, bring your rain gear. No one can say for sure what will happen in the future, but aren’t you better safe than sorry? It’s foolish to not prepare for the inevitable ups and downs of the economy. This proverb actually appears twice in the book of Proverbs!
If you are clear of bad debt, you can look into investing in assets that tend to do well in bad economic times. Diversifying yourself into these kinds of assets make your finances more resilient, so that you can weather economic storms.
2) Keep Plugging Away
Dishonest money dwindles away,
but whoever gathers money little by little makes it grow. (Proverbs 13:11)
The Bible encourages us to hang in there with our small, incremental financial progress. Whether it’s paying off debt or saving an emergency fund, we need to stick with it to see progress. Although it may not seem like it, your efforts matter greatly over time.
For more about financial downturns, paying down debt, saving for emergency funds, and diversified investing, read my book Faith and Finances. Please see www.faith-finances.com for more blog articles.
[1] https://www.foxbusiness.com/personal-finance/recession-not-many-americans-already-living-on-edge-financially-survey, accessed on October 2, 2019.