Monthly Archives: January 2023

Jan 21 2023

PREPARING FOR A RECESSION

If you stay ready…you don’t have to get ready!!  Whether or not a recession occurs, certain personal actions will be beneficial for your future.

Job loss is the most common effect of a recession. This can occur due to a layoff, furlough, or company failure.  With many people all experiencing job loss, finding a new job is difficult. For those who keep their jobs, they may experience pay cuts, reduced benefits, and no pay raises. Another major concern is the decline in value of stocks, bonds, real estate, and other assets. 

To be ready to cope if an economic downturn occurs, consider these financial strategies:

  • Monitor your monthly expenses. Know what it costs to live so there are no surprises. Be ready to pay items that occur only once a year.
  • Cut unnecessary spending. Look back at your spending to see what you could have done without. Add up what you could have avoided to make sure you spend less than you make. Possible areas to cut include cable TV, streaming services, gym membership, online music subscriptions, and a less expensive cellphone plan.
  • Start or expand your emergency fund.  No matter how small, be sure to set aside funds for poor economic times. To build your fund, have an amount automatically deposited in a saving account each month.   
  • Budget everything. Telling your money where it will go keeps you in control.    
  • Avoid debt. Just like saving, paying off debt can start small.
  • Be in contact with others to discuss possible late payments, reduced costs, cancel services, and other actions to cope financially.
  • Maintain retirement savings. Keep contributing to your retirement fund so it will be there when you need it. 

For career planning during times of recession, consider the following actions:

  • Inventory your skills, especially those that relate to essential work for your current employers and other organizations. 
  • Expand your skills through online certifications, courses, and training programs. 
  • Be adaptable. Step up to take on tasks needed within your company. 
  • Network for freelance work. Connect with others in your industry for consulting opportunities.
  • Be prepared for the unexpected. Despite taking these actions, a layoff may still occur. If that happens, expand your skills, update your resume, and connect to others through LinkedIn and community service activities.

For additional information on financial planning during a recession,

Source #1

Source #2

Teaching Suggestions

  • Have students research current economic conditions to determine the status of employment and inflation.
  • Have students create a podcast to encourage others to act on the suggestions in the article.

Discussion Questions 

  1. What are the benefits of these actions during every type of economic situation?
  2. Describe actions a person might take to better understand potential career opportunities.
Jan 7 2023

BUILDING WEALTH

A research study that surveyed over 10,000 millionaires resulted in the following findings to help guide others to achieve a comfortable financial security:

  • 79 percent of the respondents did not receive any inheritance; 80 percent were from families at or below a middle-class income level.
    Conclusion:Building wealth is within your control and doesn’t depend on being born into a rich family.
  • 33 percent never made more than $100,000 a year; 31 percent made around $100,000.
    Conclusion: Wise spending, saving, and investing are more important than your salary level.
  • 94 percent live on less than they make; 75 percent reported never having a credit card balance.  
    Conclusion: Stay out of debt and keep expenses below your income to build a financial foundation.
  • 75 percent of those in the study indicated consistent investing over a long period of time as the reason for their financial success; 80 percent invested in their company’s 401(k) plan; none said one individual stock investment was a big factor in their financial success. 
    Conclusion: You don’t need to find that one stock that will make you rich. Invest consistently in broad-market index funds over a long period of time.

88 percent of those who responded graduated from college, compared to 38 percent of the general population. And over half (52%) of the millionaires in the study earned a master’s or doctoral degree, compared to 13% of the general population. Almost two-thirds (62%) graduated from public state schools, while only 8 percent went to a prestigious private school.

Most of the 10,000 millionaires studied achieved their wealth through consistent investing, avoiding credit card debt, and smart spending, along with…no lottery tickets… no inheritances…no six-figure incomes…no lucky stock picks. 

Even when millionaires don’t have to worry about money anymore, they’re still careful about their spending. Over 80 percent reported using a grocery list in some format.

For additional information on building wealth, click here.

Teaching Suggestions

  • Have students talk to others to obtain information about actions they take to achieve long-term financial security.
  • Have students create an oral presentation or podcast that reports the findings of the study summarized in this article.

Discussion Questions 

  1. What actions do you believe to be most important for building wealth?
  2. Describe how you might communicate to others suggested actions for improved long-term financial security.