In times of economic recession and turmoil everyone’s minds turn to adages and words of wisdom from parents and grandparents. In fact, most of their insights came from surviving one of the darkest financial days in history, The Great Depression. The Depression made such a lasting impression on them they never abandoned the lessons learned. Those same lessons are still valid today.
First, in the good times, always put away something for a rainy day. Having a reserve fund will ensure that whatever comes, you are prepared. In fact, conventional sources suggest you need to have a reserve fund equal to six months of expenses in case you lose your job or get laid off. Your reserve supplies ready money and does not dry up like other sources in an economic downturn.
Second, live within your means. Our grandparents did not buy things they did not need, with money they did not have. Theirs was a clear understanding between wants and needs. When they married they worked and saved to buy a house, car, or even clothes, and never liked to borrow money. Today, the rush for immediate gratification means newlyweds insist on getting everything they want up front, and then suffer through years of paying monthly payments with high interest. Wonder what our grandparents would think of our paying 29.9% percent interest on a credit card?
Then, it is also a good idea to have several streams of income. While granddad went off to work at the saw mill or cotton mill, grandma often made extra money by selling eggs, milk, produce or even quilts, made at the home quilting frames. Granddad often raised and sold hogs or cows. They did not depend on one job to make ends meet. Today, even if you have a good job, it is not a bad idea to have other sources of income. Conventional wisdom suggests that in today’s economy, if you are not planning for your next job, you are behind. Go back to school part-time, learn a new skill, and find something you enjoy that could become a second source of income.
Don’t put all your eggs in one basket was a favorite piece of advice. The recent financial meltdown has made the wisdom of this statement all the more pertinent. Diversification of assets is one of the first rules of investment. Amazingly, success leads to a false sense of security. How many historical examples could be sighted to prove the folly of such thinking?
Guard your credit because it reflects on your reputation. The previous generation had high standards and their word was their bond. When they promised to pay something, they never considered bankruptcy as a way to get out from under the debt. In 1956 my grandmother purchased a 55 acre farm for $5,500. Only someone who came through the Depression could understand the importance of owning your own house and a piece of property. She worked in a sewing plant to pay for the place. In 1958 she lost a kidney with kidney stones. Out of work for six weeks, she told the original owner of the property that he would have to take back the property since she would be out of work for several weeks. He held the property and allowed her to resume payments when she was able. Our forbearers held a promise in high regard and worked hard to pay their bills and keep their word.
A final lesson we can learn from the past is to take a long term view of problems. We live such short term lives in this generation with immediate gratification, and the present taking most of our effort and robbing us of thinking about the future. The best response in the good times and bad is to take a long range view. The present troubles will come to pass and things will improve, and when the good times return we need to live according to the principles we learn in the hard times.
The major reason the US has reached this troubled time is because of greed. It is not just the Wall Street investors who are responsible, but every person who abuses credit, speculates, and is irresponsible. Change must come for each of us if we are to make our lives recession proof and avoid future problems.
Dr M Smith is a master’s student in History at Clemson University, also a writer, teacher, mentor, an experienced technical writer, author, counsellor and pastor. He regularly contributes articles on various topics like study skills, career coaching, life coaching. At studyskills.articlesrhere.com
Click the XML Icon Above to Receive Debt Consolidation Articles Via RSS!
