I Was Poor, So I Know How to Survive a Recession
Be prepared to change your perspective
It’s coming.
A downward turn in the economy is on the horizon.
We can see the signs. Everything costs way too much, and wages aren’t keeping up. People are having trouble coping, and businesses are laying off staff.
What happens next?
We’re all going to have to figure out how to live with less. Less money, less food, and fewer options for jobs and places to live.
But it’s not all bad news.
There are a lot of things you can do to prepare. It will be a bit unsettling, but the next few years will be full of learning opportunities.
When you’re poor, you make the most of what you have. It’s a fact. My grandparents did it. So did yours. And so can you.
I value the lessons I learned when I was poor
I was a single mom in the 90s and my boys were both under 2 years old. I never thought I’d be in that position, so I didn’t know what to do at first. I also didn’t have any family support to rely on.
Luckily, I discovered a community of single parents who shared how they were managing.
Community support
If you’re in the same boat, you learn how to paddle together. When a group of people are disadvantaged, they tend to work together and help each other. When times are tough, people support each other. Everyone works together as a team to get things done.
I discovered that community food kitchens are a great way to pool resources. When everyone shares what they have, the entire group benefits. Sharing and caring for others is a basic human value. When a community gets together, it teaches everyone the importance of creating a welcoming space.
When two parents are living with their children, they usually have a bit more money to spare. That might allow each parent to focus more on their jobs instead of looking for support outside of their home.
Single parents often stick together and that builds a feeling of togetherness. They focus on making the best of their circumstances so their children thrive.
If you’ve ever had to adapt your financial strategy to your environment, what did you do to survive?
Financial lessons
You figure things out when you have no other option. When I first left home, I didn’t have a lot of money. Being poor made me get better at using what I had, instead of buying what I thought I needed. When you’re in a situation like this, you become stronger and more adaptable. When you have enough money, you don’t learn these skills.
As a single parent, I learned how to make magic with the little money I had. When I worked, I had to factor in the cost of a babysitter for every hour I was away.
I got into the habit of reminding myself how many hours of work I would have to spend on every purchase I wanted to make. It made me realize I didn’t need many of the things I wanted to buy. You have to be super careful how you spend every dollar. You become pickier about your choices. It has to be worth it before you’ll part with the cash.
What techniques have you used to remind yourself not to overspend?
Sustainable living
I learned how to repair broken things instead of throwing them out. That saved a lot of money.
Sometimes another single parent knew how to fix something that I couldn’t figure out. We would work out a deal using the skills we both had. I could mend clothes or give them food from my garden in exchange for their repairs. You can improve your environmental footprint by reducing your consumption.
Rich people don’t worry as much about the price when they buy things. They don’t have to think too much about whether they can afford something. They rarely try to fix something when it’s broken if they know they can get a new one instead.
If you don’t have much money, you learn how to bounce back from tough times. You become patient and work hard, which helps you come back strong.
When you have a great community, tough times don’t keep you down for long. Over time, you become good at bouncing back. Rich people have more comfort and don’t learn this as easily.
You learn how to solve problems more creatively when you can’t throw money at them. Rich people tend to use their money to solve their problems.
What choices can you make today that will positively impact the planet tomorrow?
Working together
If you’re in the same boat, you understand each other. One of the hardest things I learned when I was a single parent was how to combat the loneliness I would sometimes feel. I was facing some tough times and had only myself to rely on to get through them.
That experience helped me understand others better. Rich people might not get this because they haven’t faced the same challenges.
I didn’t plan to be single and poor, but that’s how life worked out for me. That made me realize it could happen to anyone. Now I care more about others when I see them struggling. Rich people might not have this empathy because they’ve had easier lives.
When someone goes through a powerful experience it connects you to others who have weather similar things. It’s like being a war veteran. If you’ve fought in battles, you connect with others. Others don’t have this connection because they haven’t fought in the same wars.
You learn because you have to. When I was poor, I was forced to learn how to manage every penny. I figured out how to save and how to create a budget. I couldn’t afford to have someone take care of my money. I learned by reading books about personal finance and investing.
I was careful to not waste food and didn’t splurge on expensive items at the grocery store. If I had leftovers, I ate leftovers instead of throwing them out.
Simplify your life
You appreciate simplicity when your life isn’t complicated by a lot of things. Because I didn’t have a lot, I learned how to take the time to enjoy my children while they were still young.
There is happiness in a simpler life. When you have less, you learn to appreciate what you have. You take care of your things, but you have fewer possessions so you don’t have to pay to store them or protect them.
I discovered it was easier when I didn’t have a lot of possessions to take care of. People with less appreciate small things, like simple moments. Wealthy people have nice things, but they might not enjoy them as much as someone with simpler things.
You don’t have to be a single parent to learn these lessons.
Eventually, I got my Finance degree and was able to turn my situation around. I used the principles I learned to gain financial independence.
The experience of being poor taught me a lot. When I combine those life lessons with my financial expertise, I know how to prepare for a downturn.
Here are some practical things to consider.
If you don’t have a budget, make one. At the end of every day, write down how much money you earned and how much you spent. Stick to this practice and you’ll have a better idea of where your cash is going. Budgeting is a key principle of money management that is easy to learn.
Making a budget is like making a game plan for your money. Practice makes perfect. Get into the habit of budgeting before money becomes a problem.
Look at how you live. See if there are ways to spend less money on day-to-day things. Look at your spending habits and consider buying less expensive items. Try to find things that cost less but are still of higher quality. Second-hand and consignment stores are great options for saving money.
Stop paying for things you don’t need. Spending small amounts of money doesn’t seem like much, but it adds up. Look for automatic payments, like subscriptions. Taking care of these small amounts is like repairing a leak in your money jar.
Make a food plan and stick to it. Eat leftovers instead of throwing them out. Instead of buying lunches, make sandwiches at home. Buy non-perishable food on sale and have a stockpile at home.
Focus on paying your loans and debts. Don’t put your house or car at risk by getting behind on your payments. Pay off high-interest debts first. Talk to your bank if you’re having trouble. They may come up with a money management plan that will work better for you.
One thing financial lesson I learned is how much the things we own, own us. Possessions may be important to you, but they often cost money in upkeep or storage. If you have things you don’t use, sell them. Consign clothing that you don’t wear anymore. Maybe you have an extra car? Consider selling it and using the bus.
Keep some money in a safe place you can get to easily. Add as much money to this stash as you can. Saving money is a great backup plan for an emergency.
Work hard and be good at your job. Learn new things when you get the chance. Investing in yourself is investing in your future. Be the person they can’t let go of because you’re so good. It’s like being the MVP of your team.
One valuable concept I learned was the idea of creating ‘multiple streams of income.’ When you depend on a single source of income it’s riskier because you have all your eggs in one basket. I had a day job, and I put aside a small amount every week. As that money grew, I invested it in safe, interest-bearing investments. That interest was a second source of income and was part of how I gained my financial independence.
If you have any stocks or investments, now is a good time to evaluate them. If you think the stock market might go down, consider selling some stocks now and holding the cash. If you have extra money when prices are low, you’ll be able to buy the stocks back at a lower price. Or you can use that cash to buy an income-producing asset that will add another stream of income to your river. This is a great wealth building strategy.
Use your hands to repair things, or cook your meals instead of paying someone else. This can help you save money and support yourself. Learn how to make meals that don’t use a lot of expensive ingredients. If you can plant a garden, you can feed yourself some of the time. Practice sustainable living by trading work for food.
A recession isn’t guaranteed, but a lot of experts are expecting one to happen soon. If you take the time to think about what matters to you, it will be easier for you to weather a downturn if one comes.
Take some time to absorb the lessons I learned from being poor. Look at ways you can focus on community support, frugal living, and financial management, as they are valuable tools you can use in preparing for and surviving a recession.
In any case, you’ll be happier if you change your attitude by doing some of the things poor people do all the time. Appreciating what you have goes a long way to building a happier life.
This is in no way to be considered investment advice. Go talk to your investment advisor before you make any decisions.
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