Yes, recession. Are we technically in a recession at the moment? No. Can we get there in this year? Possibly. Ignoring the technical definitions, we need to look at it from our local perspective. The old joke is that in a recession, your neighbor loses his or her job. In a depression you lose your job. Either scenario is no laughing matter.
There is a lot of chatter about the chances of a recession. Even if there is not one on the immediate horizon, at some point there will be another one. Just economic (and political) reality. At our bank many years ago, if the economist predicted a recession, we changed economists! And they always editorialized their comments with “on the other hand.” If only we could have hired one handed economists!
As we are slowly clawing our way out of the economic issues due to a worldwide and lengthy pandemic, it affects most, if not all, of us. But we learned a few economic lessons during the pandemic, and we need to heed them now.
You absolutely need your emergency fund. You may not have enjoyed a long period of time to replenish your fund if you used it, but please make it a priority. It is never too late to start. Get it done.
Have you been paying down your high interest debt? It will only become higher in a recession. Get it done.
Evaluate your personal spending. Is there any room to do better?
What about your investments? Assuming you have investments, it is important to keep your current plan in place. The stock market struggles will impact your entire portfolio. You are not capable of being a market timer in the long term. When the market heals, the rising tide will lift all of the boats. Now the strategy is different for a thirtysomething or a sixtysomething, but hopefully you have considered that with your current plan.
Try not to watch your portfolio daily. If you have the plan, and if you have sound investments, you will weather the storm.
Think about your personal health – physical and mental. During the pandemic many people made a concerted effort to work on their health. Now is not the time to let it go. Exercise is critical to your physical and mental well-being. At the same time, do not overlook your mental health. Seek out help if needed. Watch for the same signs with your co-workers and loved ones.
You cannot control a recession, but you can control your personal plans and finances.
A 1975 graduate of the Wharton School at the University of Pennsylvania, Harvey enjoyed a 20+ year career in commercial banking, exercising his “golden parachute” in 1996. In his volunteer life, he is a past chair of the Small Business Banking Unit of the American Bankers Association, Easter Seal Society of New Jersey, the SAAGNY Foundation, PPAF EXPO, and Supplier Committee of PPAI. He is also a past President of PPAF. PPAI awarded him the H. Ted Olson Humanitarian Award in 2013.