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What The Last Recession Taught Us

What The Last Recession Taught Us

July 31, 2023

The last recession, as most of us know occurred between 2007 and 2009, left an indelible mark on the global economy. Many people lost their jobs and homes, and businesses across the world were forced to shut down. Remembering that sequence of events has been giving Americans a sinking feeling in light of the more recent economic events. That being said, the recession taught us many lessons that can be applied to our lives today. 

One of the most important lessons we learned from the last recession was the importance of having a financial cushion. The recession showed us that no job is secure, and that we should always be prepared for unexpected events. Having an emergency fund that can cover at least six months of living expenses is essential. During tough economic times, having a financial cushion can provide a sense of stability and balance. 

Another lesson is the importance of diversification. The recession exposed the dangers of investing all your money in one asset class or industry. Diversifying your portfolio by investing in different asset classes such as stocks, bonds, and commodities can help mitigate risk and protect you from market downturns. 

The recession also taught us the value of living within our means. It's essential to have a budget and live below our means, especially during tough economic times. Cutting back on non-essential expenses and focusing on necessities can help us weather financial storms and prepare for the future. 

Business owners learned the importance of closely monitoring and managing non-fixed expenses during a recession. This includes areas such as discretionary spending, marketing budgets, and operational costs. By being proactive in reducing unnecessary expenses, businesses can better weather economic downturns. 

The 2008 recession also highlighted the importance of having a solid liquidity plan. Business owners learned that maintaining sufficient cash reserves and access to credit is crucial during times of financial stress. Having a well-thought-out plan can help businesses navigate through challenging periods and ensure their survival. 

Another lesson this taught business owners is the ability to transform a downturn into an opportunity. Businesses that were able to adapt quickly, innovate, and identify new market needs were better positioned to thrive during and after the recession. This highlights the importance of agility, flexibility, and creative problem-solving in times of crisis.  

Finally, the last recession taught us the importance of community and supporting each other during tough times. The economic crisis brought people together, and communities rallied to support those most affected by the recession. We learned that working collaboratively and helping each other can help us overcome even the toughest of challenges. 

The last recession taught us valuable lessons that we can apply to our lives today. From having a financial cushion to living within our means, diversifying our investments, and upskilling, we can learn from the past and prepare for the future. By working strategically, staying educated, and having knowledgeable folks in your corner you can help protect your livelihood in the event of another unforeseen economic event.