In this article we’ll be talking about conventional wisdom around surviving a recession, why that wisdom rarely works, and what you can do instead.

Approximate read time: 6 minutes

A quick google will tell you the four things you must do if you want to survive a recession…

  • Save money
  • Live below your means
  • Don’t take on too much debt
  • Get a good job

Here is what is going to happen if you try to implement, mandate or encourage the above bullet points in your own life or someone else’s:


And it’s not because you’re dumb, or not taking this seriously, or you’re not motived… it’s because simplistic financial deepities like those above DON’T WORK.

Ready to implement some tools that will ACTUALLY help you prepare for and survive a recession?  Read on!

Approximate read time: 9 mintues

Survive a Recession Skill #1:   Learn how we humans assess risk

Risk can mean a lot of things. Debt is usually what jumps to mind, and yes, we all need to develop a strategy for paying down debt within an adaptable budgeting system. But risk can also mean anything from deferred car maintenance to unhealthy eating and even risky behaviours. When I’m evaluating how much risk my clients have, I’m not listening for drunk driving or skydiving, I’m listening for procrastination, past-focused talk and choices made out of fear or crisis.

Debt, procrastination and short-sighted choices are not the actual problem, and therefore our clients should never feel judged for that (or anything else). Underneath these risks are crisis, panic, uncertainty, not having all the tools they need, and a feeling that their brittle world could shatter at any time. And I need to make this perfectly clear, these risky responses to underlying concerns have NOTHING to do with income. My high-income clients struggle with procrastination just as much as my clients who have literally no income. A six-figure income doesn’t mean you have less risk… in many cases high-income earners have more risk.

A layer deeper than risk is our obsession with loss aversion.  We feel loss more than we feel gains. Our brains are good at a lot of things, but correctly assessing risk and the potential for loss is not one of them.  According to Khaneman and Tversky, the pain of loss is about twice as painful as the pleasure of gain (psychologically speaking).  No wonder, then, that we are  adept at equating loss with pain, and will try to avoid that loss at all costs.

Survive a Recession Skill #2:    Grow your resilience

There’s a word for financial resilience, it’s called savings. And while having savings is absolutely crucial, it’s the underlying safety and cushion that savings provides us that is important.

But even more critical than savings is developing our personal resilience. This is a chicken-and-egg thing. As my clients learn to trust themselves and grow resilient, somehow, as if by magic, they begin saving money. And that reserve, in turn, assures them that they can weather storms as they come. They then have more available bandwidth to make better and better choices and the cycle trends upwards.

Both financial and personal resilience must be grown slowly. If you want to assure your savings grow and stick around, don’t start too big. Savings strategies need to start almost microscopically small. Games like the $1 or $5 bill game are one way to start saving in a small, painless way that also teaches self-awareness. Another way is a saving strategy starting at $10 a month and then gradually increasing may seem pointless because money isn’t accruing fast enough to be good for anything, but remember, savings is not about the money, it’s about the resilience.

Survive a Recession Skill #3:  Thoughtful Stockpiling

Stockpiling, surplus on hand, hoarding, and “keeping back” as my grandmother called it, are hot-button topics even outside of a pandemic or economic downturn. There is no right or wrong amount of peanut butter to keep in stock. There is no right or wrong amount of toilet paper to keep on hand. Our lives are more complicated now and our economy has changed dramatically since The Great Depression, when a room full of food was the only way you could know your family would be fed for the following year.

I don’t battle stockpiling, but I do battle against the underlying reasons for it… namely fear (the enemy of resilience), emotional decision-making, our unfamiliarity with opportunity costs, and the wants vs. needs decision making tool. To put it bluntly, the wants vs. needs assessment is garbage. If that was going to work, it would have worked decades ago.

Understand the opportunity costs of stockpiling

Let’s talk about opportunity costs. In its purest sense, once we make a choice, we lose out on all the other possible choices we could have made instead. It’s usually used in terms of a choice made with money. If I spent $3 on a coffee, I can’t then also use that same $3 on gas.

But opportunity costs apply to our time and energy as well with one caveat. We can always make more money, we can always make more energy, but we cannot make more time. Understanding the impact of our choices on our time, energy AND money through the lense of opportunity cost is a crucial step to good decision making.

So what is the cost of that second loaf of bread? Storage and spoilage, certainly, but also the fact that the few dollars spent on that loaf of bread cannot then be spent on something else. And bread isn’t fungible. It cannot be traded for other things. It may or may not be worth the convenience of having it on hand or the great price we got on it. There is no right or wrong answer here. Frustratingly, we rarely get the option for a nice, clean right-or-wrong binary choice. This is why traditional “wisdom” like “just buy what you need, not what you want” fails us.

So what would your life look like if you could…

…trust yourself to build up your savings?
…be both financially and internally resilient?
…get just a little bit better at assessing risk?

Would you be concerned that you couldn’t survive a recession?  Would you even notice if there is one?

Next Recommended Article:  When NOT to Give Money to Family

Last updated: July 2023