5 Mistakes That Can Cause Financial Ruin During Recessions

The painful truth about life is that the economy functions in cycles.  When things are good, everybody makes money, and every day is a win/win scenario.  Unfortunately, the economy also goes through downturns as well.  And people struggle to survive during recessions.  If and when the economy slows down, it’s important to be smart and practical about managing money.

Keep Your Wits About You:

Personal Finance Expert Emma Johnson cautions that, “A recession is a decline in the economy. On a broader scale, this means that businesses lose money, and industry produces less product for two quarters — or six months — in a row. What does a recession mean for everyday people? Recessions are typically marked by higher unemployment, decreased housing prices, and drawbacks in stock market equities or other investments.” Here are a few strategic missteps to avoid when recessions hit hard:

1.    Panicking:

Stressing out about money, and becoming driven by financial stress, is a recipe for disaster during recessions.  Panic leads to impulse, wastefulness, and shortsighted thinking.

2.    Borrowing Money:

Taking on debt during a recession is a risky move.  Mainly because it’s difficult to guarantee that debt can be serviced consistently.

3.    Co-signing for Other People’s Liabilities:

The only thing worse than borrowing money during a recession is co-signing for someone else’s liabilities.  Even if you happen to be financially stable, there’s no telling what the consequences of a default would be.

4.    Falling in Love With Get-Rich-Quick Schemes:

The unfortunate thing about recessions is that they often create ripe conditions for scams.  Fraudsters recruit heavily when everyday people are desperate for money.

5.    Gambling:

The temptation to make a quick buck by gambling is strong during recessions.  But one wrong bet is all it takes to trigger bankruptcy.  This type of risk is never necessary.

Conclusion:

Good financial decisions are always advantageous. But they hold even more value when made during times of crisis. This is why it’s advisable to be vigilant and responsible whenever recessionary conditions emerge. If you like what you just read from our blog, you’ll love the various informative courses, workshops, and events listed on our websites and social media. Whether you’re interested in personal development, health and wellness, bettering your relationships, or the overall improvement of your business, give us a call at 1 (800) 913-0222 to find out how Richard Martinez can help you break past your daily struggles and start soaring in success.