Recession Versus Depression: Survival Options

“To every thing there is a season, and a time to every purpose under the heaven:… a time to plant, and a time to pluck up that which is planted;… A time to get, and a time to lose; a time to keep, and a time to cast away; A time to rend, and a time to sew; a time to keep silence, and a time to speak…” 

– Ecclesiastes 3:1-2, 6-7 [KJV] –

Given the current circumstances of the global financial market, it seems like an appropriate time to review some pertinent economic terms. After that, we’ll review a handful of options for dealing with a challenging monetary environment.

– The Problem –

Economy: A term referring to activities centered around the production, use, and exchange of resources and wealth within a community. (Refs: 2, 3) An economy can describe the resource movement in a community of any size. As a result, an economy can describe the resource management of a group as large as an international industry sector  – or as small as a village or family. Economic activities ultimately determine where the resources end up in a community.

Recession: A period of notably reduced economic activity. Historically, a financial downturn was considered a recession if it persisted for at least two (2) consecutive quarters, i.e. six (6) consecutive months. (Refs: 4, 5) Furthermore, to be considered a recession, the financial impact must be widely felt throughout the economy. Despite these facts, the effects of an economic recession are defined as being less severe than those of an economic depression.

– Potential Options –

1. Track Your Money With A Budget – You can’t know how much you are spending (or when you are spending it) without tracking your money. Your system doesn’t have to be complicated to help your finances. If a formal budget is too intimidating, start small by listing your expenses. For each entry, write down how much was spent, where the money went, and when it was spent. At the end of each month, add everything up to see how much you spent. Do you have any money left over from your income? Or did you spend more than you were paid? Now that you have an idea of where your money is going, you can start putting together a plan to keep more of it. 
2. Cut Unnecessary Expenses – Reduce spending on luxuries, surplus movie subscriptions, toys, games, and junk food, so you can have more money to put toward food, clothing, housing, utilities, and transportation.
3. Take Steps To Increase Your Income – If you’ve ever wanted to do so, now might be the time to take up a side hustle or experiment with launching a small business. If your employment status is shaky or if you can get better pay with a new boss, start looking for a new job. Take items that are quietly gathering dust, and turn them into money – by selling them.
4. Create A Savings Safety Net – If there is surplus money after paying your monthly bills, you have the option of putting it toward savings or debt. Before putting money toward debt, it could be useful to put money into a savings fund. It may be a struggle, but if you can set aside enough money to cover a few months of bills and have additional money for emergencies, it would be much harder to run out of funds during an economic downturn.
5. Get Rid Of Debt – The fewer bills you have to pay during tough economic times, the better. Debts with variable (or changing) interest rates could be the most dangerous for your finances – because creditors could hike the interest that they charge you if they find themselves needing more cash.
6. Get Maximum Value From What You Already Own – Before you throw an item away, ask yourself if its lifetime can be extended. Can you repair, renew, or upcycle the item to get more service from it?
7. Buy Used – Does the much-needed item on the household or business shopping list have to be new? If you don’t have to pay the retail price for what you need, consider buying it second hand. Keep more money in your pocket for things that must be purchased new.
8. Maintain A Long-Term Perspective – Despite the daily financial stress, try to keep your long-term financial situation in mind. Make decisions based on your long-range financial goals. This approach will help you to avoid making hasty (and costly) financial decisions.
9. Acknowledge The Power Of Pride – The desire to keep up appearances can be a powerful motivator. Unfortunately, it can also be a massive roadblock. Other people’s opinions probably won’t feed you or your family, so why should the fear of opinions erode your financial standing? Do what makes sense for your budget. You can always worry about what people think later.

References

1. “Depression In The Economy: Definition And Example”; Accessed September 30, 2022; www.investopedia.com/terms/d/depression.asp
2. “Economy”; Accessed September 30, 2022; dictionary.cambridge.org/dictionary/english/economy
3. “Economy: What Is It, Types Of Economies, Economic Indicators”; Accessed September 30, 2022; www.investopedia.com/terms/e/economy.asp
4. “Recession: Meaning In Economics With Causes”; Accessed September 30, 2022; www.investopedia.com/terms/r/recession.asp
5. “What Is A Recession?”; Accessed September 30, 2022; www.bankrate.com/glossary/r/recession/

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*** This information is shared by Momma’s Money Tree and D’Loreyn Walker MD, author of “The Proverbs 31 Millionaire”, “God’s Plan For My Money”, and the FREE 5-page PDF “MMT 6-Figure Business Accelerator”. To learn more, visit the Products & Services page of MommasMoneyTree(.com). ***

D’Loreyn Walker, MD is a Bible-based business and finance coach, the author of “The Proverbs 31 Millionaire” and “God’s Plan For My Money”, the founder of Momma’s Money Tree, a retired General and Child-Adolescent Psychiatrist, and a health educator.

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Momma’s Money Tree

– Where The Bible Meets Business & Personal Finance –