When the economy begins to decline, the winners are often not those who act the fastest, but those who are best at managing resources. As the global landscape continues to be volatile, the real survival skill lies in preparing in advance and making plans.
Think of Leonardo DiCaprio in the movie "The Ghost Hunter":
He was abandoned by his companions, seriously injured, and almost penniless.
He survived not because he was the strongest, but because he knew how to adapt.
He made the best use of the limited resources at hand, conserved his energy, and knew when to act and when to lie low.
Every decision is made for one goal: to live until tomorrow.
The same principle applies during economic recessions.
When the economy begins to decline, the winners are often not the ones who act the fastest, but those who are best at managing resources.
They keep cash on hand to reduce unnecessary risks.
They understood that at certain times, the goal was not to pursue growth, but to survive.
This article is a "survival guide" for anyone who wants to prepare for difficult times.
I recommend reading " Part One " of this article first, as it will help you understand the world situation we may be facing.
Step 1: Reserve emergency funds (liquidity)
This is the most important step: establish or increase your emergency fund.
If you don't yet have enough savings to cover 6 to 12 months of basic living expenses, then now is the time to make it your top financial goal.
When the economy is unstable, the risks of unemployment, reduced income, or unexpected expenses increase.
Having a sufficient cash reserve gives you three things: liquidity, stability, and most importantly, time.
It allows you to cope with changes with ease, without having to borrow money at high interest rates or sell long-term assets at a low point in the market.
How exactly do you do it?
Calculate monthly necessary expenses
This includes: rent/mortgage, utilities (water, electricity, gas), food, insurance, transportation, and minimum debt repayments.
Set savings goals
Multiply your monthly necessary expenses by 6 to 12 to find out how much you need to save.
Cut non-essential spending
Analyze your spending, reduce expenses on takeout, entertainment, impulse purchases, etc., and transfer money to an emergency account.
Set up automatic savings
As soon as you receive your salary, a portion is automatically transferred to your savings account. This is called "paying yourself first," which effectively prevents you from spending money recklessly.
Keep funds easy to withdraw
Emergency funds should be kept in an account that can be accessed at any time, and not locked up.
Step Two: Debt Reduction
During an economic downturn, debt (especially high-interest debt) can instantly plunge you into financial distress.
Credit card and online loan interest rates are very high, and once income decreases, the losses can easily snowball.
Action list:
- List all debts: record the balance, interest rate, and minimum payment for each debt.
- Prioritize paying off high-interest debts: Pay off the highest-interest debts first, even if it means paying a little more each month.
- Consider debt restructuring: see if you can lower interest rates and simplify repayments through refinancing or consolidation.
- Halt new debt: Don't borrow money unless absolutely necessary.
The less debt you have, the more flexible you are in a storm.
Step 3: Develop multiple income streams
Don't put all your eggs in one basket—it's an old saying, but it's also true.
If your life depends entirely on a job, then unemployment can be a fatal blow.
Three ways to increase income:
Start a side hustle
For example, freelance work, consulting, tutoring, running an online store, or driving... a few hours a week can provide an extra layer of income buffer.
Building passive income
Invest in dividend-paying stocks, rent out real estate, or create digital products (such as courses and e-books) to build "passive income."
Improve skills
Learn skills that make you more valuable, or even switch to a more stable, higher-demand industry.
The core message is: Don't live on just one salary.
Step 4: Allocate assets to hedge against inflation
When the economy is bad, you should buy assets that can preserve or even increase their value.
Pay attention to the following signals:
An inverted yield curve is often a precursor to an economic recession.
Asset types to consider:
Defensive stocks
Demand is relatively stable for essential consumer goods, utilities, and healthcare.
High-quality dividend stocks
Choose companies with stable dividend payouts, low debt, and consistent profitability.
Gold and other precious metals
It is often used to hedge against inflation and currency risk during recessions (don't buy at high prices).
High-quality government bonds
With government backing, it is relatively safe.
Try to avoid:
- Highly indebted companies
- Purely speculative tech stocks and cryptocurrencies
- Highly leveraged industries (such as commercial real estate)
Step 5: Keep your cash on hand and wait patiently.
Recessions bring panic selling and extreme pessimism, but they also often mean opportunities.
Having money gives you choices.
Keep enough cash on hand so that you can make a move when market sentiment collapses and quality assets are unfairly sold off.
Remember: Cash is risk-free leverage.
Don't rush to "buy the dips." Wait until the market has truly bottomed out and the market sentiment has been released before taking action.
Patience itself is a form of capital.
Step 6: Find entrepreneurial/side hustle opportunities
Opportunities can be found even in crises—especially now.
The barriers to entry for starting a business in many industries (especially in the digital sector) are much lower than before.
A single computer can reach global markets.
Some directions you could try:
- Freelance writer/designer/programmer
- Social media management outsourcing
- Online teaching
- Website building
- Video editing
- Open an online store
- Local services (cleaning, pet care, car detailing, etc.)
Key points:
First, validate the market, control costs, and differentiate yourself. Establish a foothold first, then plan for expansion.
One last reminder: Don't let your emotions get the better of you.
Most people fail to accumulate wealth because they easily lose interest.
When the market is rising, everyone thinks they are a genius, but few people actually learn, analyze, and build systems.
When the market becomes boring or declines, people start to get distracted, give up, and stop thinking.
And this is precisely the most dangerous moment.
- True advantages are often established when no one is paying attention.
- It comes from continuous research, repeated practice, and patient waiting during periods of stagnation.
If you only pay attention to the market when it's lively, then what you like isn't investing, but just excitement.
When the storm comes again, you will be more vulnerable.
remember:
A bear market acts as a filter.
Only those who can endure it can truly live a long life.
This guide is not a prediction, but a contingency plan.
Hopefully, it can help you face the uncertain future with more composure.
