Regardless of which side of the coin you’re on, there’s no doubting that the economy is roaring like never before in our history. As we hit record numbers in the stock market with unprecedented growth, optimism is high for this surge to continue for the foreseeable future. Which is why right now is the perfect time to have a serious conversation about preparing for the next economic collapse.
Yes, it’s understandable. This post is ruining the fun. But the next economic collapse WILL happen. It’s only a matter of time. As the saying goes, what goes up, must come down, whether that’s in the form of a currency collapse, bubble popping, terrorism, or natural disasters. The problem is, a lot of people don’t know how to use prosperous times to prepare for that next downturn.
There’s no doubt that human nature comes into play. When we end up with more money in our pockets, our first inclination is to spend it! We get it in our heads that things are looking up, so it’s the perfect time to put a down payment on a bigger house, turn in the car for a newer model, or even invest in that new 60-inch 4K ultra high-definition TV in time for the big game.
We LOVE to spend money, especially when we have it. Yet, even when we don’t. It’s perfectly fine to take a few extra bucks and enjoy the fruit of your labor. But what are you doing to protect yourself from the next big economic collapse? You know it’s coming, so why not prepare for it?
Learning from a Past Economic Collapse
One of the biggest lessons from a past economic collapse has been how quickly everything can go down. The collapse of 1929 happened over one weekend in October, fueling what is known as The Great Depression. One Thursday, the economy decided to take a dive. By Tuesday the next week, investors had lost their life savings. It didn’t fully recover for another two and a half decades.
The 2008 crash happened in a single day. On September 28th of that year, investors pulled over $140 billion from the market. As bad as that time was, sending America into one of the worst recessions in our country’s history, it could’ve been much, much worse. Thankfully, Ben Bernanke recognized the signs and swiftly took action.
Knowing that the collapse can come at any time, it’s in your best interest to prepare for it.
1) Have an Emergency Fund
The FIRST thing you should ever do with your finances, well before you buy anything else, is to set up an emergency fund of at least $1,000. That’s before you start paying off debt or investing your money. Even then, $1,000 will only get you so far. When you sit down to plan the bills, make sure you can afford to divert a certain amount into your savings.
If you lose your job suddenly, having a decent cushion under you will protect you for several months while you work out your options. If you live paycheck-to-paycheck, life will get immensely difficult if you get canned and you’re broke. While good times might inspire you to buy the next big toy, make sure you have a comfortable cushion first.
2) Diversify Your Investments
As the saying goes, don’t put all your eggs into one basket. When an economic collapse happens, it usually involves the stock market and the value of the dollar. While the stock market will probably take a tumble, that doesn’t mean every single stock will crash and burn. There will still be some industries that thrive, even while others struggle to breathe.
With a diversified portfolio, your chances of losing EVERYTHING goes down significantly. For example, during the 2008 crash, the value of gold rose to record levels. The same was true for silver and other precious metals. Look up depression and recession proof industries and make wise investments for the future.
3) Get Creative About Additional Sources of Income
As tough as the 2008 crash might’ve been, the internet was sort of a savior for those looking to get creative about making a few extra bucks. There are currently record numbers of people trying their hand at online entrepreneurship, learning about internet marketing, ecommerce, affiliate marketing, and so much more.
A lot of moms took to Facebook, selling various items and starting miniature businesses that helped bring in more cash for the family. Even if you don’t think you need the extra cash now, it will benefit you in the future to have an additional source of income. Start by joining Facebook groups and investing in materials written by the experts to show you how to get started.
Despite good economic times, it’s always a good idea to be prepared for the worst to happen. Life is unpredictable and bad things can happen no matter the economy or the season. Be fully prepared before you start spending that extra money.