What the Recession Has Taught Me
The recession impacted the portfolios of millions of people in the United States. It's safe to say that many consumers experienced losses that they hope to never experience again. Some writers say the recession was a 'cleansing' that was needed for an overextended economy. I'm not sure myself. I do know that I learned some things from this event.
- Conventional is no longer conventional. Some financial gurus recommended a 75/25 Stock/Bond allocation for retirement funds. Folks who carried this ratio got slammed by the market drop over the course of 2008. We need to rethink what the best allocation is for our finances.
- A "right age" to retire has changed. Many investors who were less than 5 years from retirement have realized they need a 'new' plan. I think the radical drop in the market means you need to be willing to work longer than you may have anticipated.
- Having a 3 month emergency fund is a must. The job losses of the recession left many families with no resources to fall back on. Having a 3 month cushion can 'buffer' the blow of a job loss and give someone some time as they seek other employment.
- Home equity can vanish. The value of your home can change. Many homeowners went to tap equity to learn that it simply wasn't there. Those that had it, could not tap it due to banks tightening up lending practices.
- Definition of 'reliable job' changed. The unemployment associated with this recession has been staggering. Many employees have had to 'retool' to get a new job. Still others weren't able to find anything at all. The new normal for employment is 'do what pays the bills' and find a better job in the meantime (if such a thing exists).
There you have it. These are the lessons I've learned from the recession. Are there any you wish to add?
Best Links of the Week
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You are so right. We need to be continually learning and exploring other interests. The only thing permanent is change.
This has been the hardest recession since the 1930’s. I don’t think most people working today will see another one like this one. The recession of 1974-1975 taught me some lessons to be at least somewhat ready for this one. The biggest lesson is to make as much money as you can in good times and save it for the hard times.
Never sell when the market is low and sell when the market is reaching new highs. I actually timed the market pretty well in 1990 and 2000. I missed this one badly. Get um next time.
Our home business was really affected by the Economic recession, we have to cut jobs just to cover up our losses. fortunately, we have already recovered. .