Recession jitters and your finances
Even just talk of a possible recession can trigger anxiety for anyone who associates it with the major economic downturn of a dozen years ago. But history doesn’t always repeat itself.
“The financial crisis in 2008 was basically the second-worst recession ever after the Great Depression in the last hundred years; it doesn’t always have to be like that,” says Luke Delorme, director of financial planning at American Investment Services. “There are relatively mild recessions that aren’t so impactful.”
Recessions — and their severity — are out of your control, but as Delorme and others point out, your own financial situation doesn’t have to be. You can take steps to insulate yourself from an economic downturn. And if circumstances align in your favor, you may even thrive.
It’s impossible to know for sure whether a recession is on the horizon, Delorme notes. The good news is that one may now be further off than it had appeared just months ago. If so, it means more time to prepare.
Tanja Hester and her husband, Mark Bunge, were among the lucky ones during the financial crisis. In 2008, the California residents were political consultants, and their jobs remained intact, meaning they were spared many of the setbacks others experienced. Still, they readied for the worst, making sure they’d be well-equipped to tackle their goals.
“It felt like a time to batten down the hatches and get things in order, so we were definitely ramping up our savings at that point,” says Hester, author of “Work Optional: Retire Early the Non-Penny-Pinching Way.”
As a result of their planning, they were able to achieve milestones such as paying down