From Fear to Financial Freedom: How to Navigate a Recession

Will there be a recession? Depending on the source, some experts say yes, some say no, and others say it will be coming within the next two years. 

No matter what the economists say, I believe it’s important to prepare for all possibilities. 

Improving your financial literacy will help you navigate recession-proofing, weather financial downturns and develop your financial decision-making skills. That will build your path to a wealthier life, regardless of the economic climate!

What is a recession, and what does it mean for you?

A recession, in general terms, is a prolonged economic slow down where people spend less money and businesses make less profit. That often leads to cutbacks and job losses. 

In your everyday life, you might also see prices and interest rates rise, while house values and stock markets may decrease. 

This can cause a lot of stress, anxiety and uncertainty…if you don’t know how to handle a recession.

What is “The Rich Dad Poor Dad Approach” to Recession-Proofing?

Rich Dad Poor Dad is a book I co-authored that was a first in a series of 15 books. The core lessons in the book will help you with managing money, as well as your financial stress during a recession. 

Three of the key takeaways include:

#1 Acquire assets and reduce liabilities. Assets help you generate income and put money in your pocket. These include things like: 

• Rental properties
• Paper investments like stocks or notes (loans to others that earn interest)
• Businesses
• Intellectual property

Liabilities, on the other hand, take money out of your pocket. Examples include:

• Mortgages
• Auto loans
• Credit card debt
• Payday loans

To gain financial freedom, you need to increase your assets and reduce your liabilities. 

#2 Work to learn, not just to earn. This means thinking past an employee mindset and looking for ways to improve your financial knowledge. When you do so, you will learn that adding income streams vastly improves your long-term financial wellness. You can do that by:

• Investing in stocks, REITs, businesses, etc.
• Starting a side hustle
• Renting out a spare room
• Purchasing a rental property
• Developing your own assets
• Engaging in affiliate marketing

These are just some of the things that can help you make smart investments and build your power of passive income (another lesson in the book). By diversifying your income streams and increasing the amount of money you have coming in, you reduce the need to rely solely on a salary during economic uncertainty. That will make you more financially resilient.

#3 Avoid the rat race. Something the truly wealthy understand is that you have to make your money work for you. When you are stuck in the cycle of working just to pay bills, it can become overwhelming and feel like a never-ending rat race. 

But every dollar you can make work for you by investing in assets, will help to break the cycle! 

That will put you on a path toward financial freedom, where you have more money coming in than going out.  

There is a positive side to a recession.

A recession doesn’t have to be all doom and gloom. When you switch your mindset and start looking for the openings instead of focusing only on the obstacles, you can turn crisis into opportunity!

A recession is the perfect time to use your power of smart investing. During a recession you can take advantage of:

• Undervalued stocks
• Dollar-cost averaging
• High-quality bonds
• REITs 
• Decreased real estate costs

The more of these smart investments you can make, the richer you will become!

As you increase your financial literacy, it becomes easier to navigate economic downturns or other financial emergencies. That will help you reduce fear and stress in uncertain times, which will in turn help you make better financial decisions and build your wealth, even in the middle of a recession. 

BONUS: A SHARON LECHTER FINANCIAL WELLNESS TIP

If asked, ‘What would Sharon Lechter do in a recession if she had no money to invest?’ my answer is, I would focus all of my energy on developing my power of association. Throughout my career, I’ve learned that serving and supporting others and building genuine relationships unlocks countless opportunities, including higher-paying jobs, skill advancements, business referrals, investment tips, partnerships and more! Developing your power of association is a fun and intelligent way to improve your mental and emotional wellbeing, along with your financial wellness.

If you want to learn more money management tips from one of the authors of Rich Dad Poor Dad, I invite you to join me for Let’s Talk Money. It’s a live monthly webinar session where I share my insights on the economy and financial world, as well as the opportunities I see for investors and business owners. I also reveal the things that are influencing my financial decisions, so you can get actionable, real-time insights to navigate a recession, should it occur.  

CLICK HERE TO SIGN UP NOW!