The principles of money

“Living is a process of developing oneself. Without experiencing pain from disconcerting periods of our lives, we would be a different person, perhaps a lesser person.” 

Kilroy J. Oldster, Dead Toad Scrolls

My first job was serving meals at an upscale retirement home in high school.  One thing that always struck me as odd, was the residents absolute hate for waste.  If they didn’t finish their meal, they often gave it to me to eat or gave it to someone else to finish.  What I know now is the remnants of the Great Depression permanently shaped their values and life experience. In 2007, I would get to experience first-hand a recession that would, also shape my life.  Here’s what I learned.

You Need an Emergency Fund.

It’s cliché, but important.  It’s the tool that gives you time to think of a rational next move in a downturn.  The unemployment rate during the recession jumped from 5% to 10%.  I remember hearing the story of Joshua Persky, who stood out on a street corner handing out resumes after being unemployed for 6 months. Because of this experience, we are in the process of growing our emergency fund to 12 months. This gives our family a buffer to weather the storms of unemployment and recession.

Everyone Will Trim the Fat

 While working full time at a non-profit after college. They cut benefits, social outings, and non-essential staff.  I remember my husband’s job had beer, scooters and over the top Christmas parties. The following year, there were no scooters, beer socials and their Christmas party was a magic show.  Consumers also cut spending during downturns.  Vacations, dining, and luxury good companies see a dramatic decline in revenue because they are non-essentials.

No One is Above McDonalds

It should go without saying that you are not better than anyone working at McDonalds. And if you didn’t know, I am happy to be the one to give you truth.  In 2007, McDonalds was one of the rare companies hiring during the recession.  They saw an uptick in professionals applying for work that some called a dead-end job. Many engineers and bankers found themselves working low wage hourly jobs for survival.  Survival brings humility and for many who said, “never would I”, did.

Things Will Become Cheap

 Some people during that time were financially secure. Stocks, housing, and travel prices were at all-time lows.  Many studies show that the wealth gap increased dramatically during that time.  People who had the funds increased their investments. Assets like single family houses and stock at all time lows. And those with money bought to increase their net worth.

New Technologies and Ideas Will Develop

During the Great Recession, Uber and Airbnb were born. CNN aired its first episode in 1980 during a recession. Trip Hawkins left his job at Apple to start Electronic Arts (EA) during the energy crisis in 1982.  It may be that people realize their jobs are not as secure as they seem and are now willing to take a chance on themselves. Those out of work, have time to meditate on new ideas and innovation. 

Learn From Hardship

I can now empathize with the children of the Great Depression. Living through scarce times alters your values and belief system. The key is to learn from them. These lessons will assist you in handling the next event with grace and humility.