- People are talking about preparing for recession, but I’m just going to keep my finances the same.
- Being self-employed makes my job more stable, but I also live in an area with very low unemployment, which means I’ll likely be able to find work if I need it.
- At 30, I have years to wait out the market, so I want to focus on life-long healthy financial habits, not preparing for one downturn.
- Read more personal finance coverage.
Lately, it seems like everyone has been buzzing about a possible recession. Financial experts and laypeople alike love to play out different scenarios, wondering how a recession might affect their financial future.
While I understand that recessions are scary (especially for people nearing retirement age), my plan for handling the next recession (which is bound to come around sooner or later), is to do nothing at all.
That’s right: I plan to carry on with my finances just the same, whether there’s a recession or the economy is booming. Here’s why:
Self-employment makes me more secure
One of the biggest fears during a recession is that jobs will disappear. That’s terrifying. Being unexpectedly laid off can turn your whole world upside down (I know, because it’s happened to my husband twice). However, I’m insulated from that risk because I’m self-employed.
Being a freelancer is often thought of as a less-secure career option, but with a potential recession looming, it makes me feel more safe than if I was working a traditional job.
I have about 20 different clients that I work with in some regard. Even in a horrible recession, it’s unlikely that all of them will disappear at once. Sure, I would expect my bottom line to be impacted if a recession hits, but I know I won’t go from a normal income to nothing, since I have a diversified set of clients.
Living rural might work in my favor
I live in a very rural area (my town has a population of less than 1,400). Living so far away from everything can make the things that happen on Wall Street or in Washington D.C. feel like less of a threat.
For example, home prices are already low in my area. If a recession hits, it’s unlikely that they’ll tank even further. Even if they did, the fact that I paid bargain prices for my two homes (one that I live in, one that I rent out) makes me confident that I could hold onto them long enough to ride out a recession.
In addition, the unemployment rate is very low where I live. I’m in New Hampshire (a state tied for the third-lowest unemployment rate) and border Vermont (which has the lowest unemployment rate in the country).
In my region, the state estimates the unemployment rate to be just 2% (well below the national average of 3.5%). If my husband or I needed to pick up more work, I’m confident that we could, even if a recession hits.
Time is on my side
I’m only 30 years old, so time is on my side when it comes to weathering a recession. I just bought a house, and plan to live here for at least the next 10 years, which should give enough time for the market to correct itself.
More importantly, I likely won’t be accessing retirement savings for at least another 30 years — longer than I’ve been alive! While the market ebbs and flows, history shows us that it grows over time, increasing at about 7% year over year.
It’s true that stocks might lose value in the short run, but that doesn’t matter to me. In fact, it would be beneficial for my finances, since I’d be buying stocks at a bargain. Because of that, I actually plan to increase my retirement contributions in 2020, even if talk of a recession persists.
The bottom line
Talk of a recession can be scary, especially for those of us who became adults right around the 2008 financial crisis. However, I’m young enough to not worry too much about a recession. One is bound to come around sooner or later, and it’s entirely out of my control.
Rather than worrying about how to micromanage my finances to fare well during a recession, I’m going to focus on continuing to build healthy financial practices. That includes spending within my means, paying down debt, locking in low interest rates for my mortgages, and investing in retirement savings.
By taking those steps, I’m preparing not for the next recession, but for a lifetime of healthy financial habits, no matter what the market brings.
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