| Having lived through like 5+ of these downturns now, here's what I tell my kids: -- These cycles are part of the sickness of our system. Prepare for it. -- When times are good, hoard money. IE: save it, don't spend it. Put it in the market, in assets, in something for when you need it. -- Always have a side hustle. It doesn't have to be much, but some little side thing where you are making a little money can make a difference when times get tough if you lose your main income source. -- Live way below your means. While I hate the idea of being so frugal that you can't enjoy life, the cycles I've seen tell me that you have to be really on top of this. Drive that used car for 5 more years. Don't go out to eat. Buy clothes only at thrift. Don't expect to be able to vacation every year. Squeeze that budget as tight as you can to make sure that you have cash in the bank to last a year+, and more than that if you have a spouse /house / kids. -- Even when things are bad, there's someone out there who is making money and doing ok. Health care, for example, at least in the US, is often a safe place to work in bad times. There are stocks that run counter to the rest of the market, etc. --Try to stay ahead of the curve when things look like there are clouds coming. The market can shift downward quickly and unexpectedly, but it is often a longer, slower improvement. There is no logic to any of this, it is often the whims of forces we don't control. -- Decide how much risk you are willing to take on in life. Being a self-employed / small-business owner is hard in a downturn. I'm optimistic that things are going to get better again throughout 2023, because the things that are dragging us down at the moment feel more ephemeral than real, IE: we're in a recession because we all think we are in a recession and we are all following the playbook for a recession. So there will be layoffs and cutbacks etc until such time as we all realize it's probably not armageddon and we all go back to trying to push our respective businesses forward again. |
I was spending about 10-15% of my gross income for a few years until I realized I was denying myself a lot by not spending closer to like 20%. Yes I am happy that it allowed me to grow my investments quickly. but after a certain point it feels like you are just optimizing for a high score in your 60s. If you are financially driven you may always be thinking that $1 now could become $10 (in real terms) in a few decades. But I imagine when I’m 60 I’d gladly trade 20% of my worth to be able to experience things as a young adult.