I keep reading about experts predicting that a recession is coming. What do you think? Although I am getting ready, what is your advice to help me ride it out?
Dear Getting Ready,
Of course a recession is coming! They are inevitable; we just don’t know when or if we will even be here to experience it. Our nation has survived recessions in the past. Those who plan ahead typically weather them well, and even come out ahead!
Warren Buffet once famously said, “Predicting rain doesn’t count; building arks does.” I have some practical and Biblical advice that will help you.
A recession is simply a contracting of the economy or period of correction from over-expansion. Technically it means:
A rapid increase in the unemployment rate may indicate that a recession is in progress. Other red flags may occur like the current global recession in manufacturing, impacted by the trade war. Here is an article with a much more detailed definition.
Since we know two things – a recession is certain to come and opportunities will exist – I will give my advice according to the 4 P’s.
Anticipating a recession, we can set goals, make clear plans and escape emotionally-driven decisions made in fear. I like to say that planning is the antidote to fear. Since we have had lots of time to plan, (an unprecedented span of continuous economic growth since 2009), there should be nothing to fear when the correction occurs.
In Genesis 41, God reveals the meaning of Pharaoh’s dreams to Joseph with a plan on how to prepare for the future. They would have seven years of plenty followed by seven years of famine. They were to gather and store grain for Pharaoh as a reserve against the years of famine. Pharaoh saved 140% of the grain to prepare for the economic collapse. This goal was reached by saving 20% each year for 7 years.
If you have not been gathering and building your financial reserve, it’s time to begin.
Preparation will reduce fear and stress. Let the facts overrule emotions. God is sovereign and completely in control regardless of the economy. So, trust Him, stay or get active in a local Bible-believing church, and serve the body of Christ.
The name of the LORD is a strong tower; the righteous man runs into it and is safe. A rich man’s wealth is his strong city, and like a high wall in his imagination. (Proverbs 18:10-11 ESV)
Whoever trusts in his riches will fall, but the righteous will flourish like a green leaf. (Proverbs 11:28 ESV)
Recovery from recessions can take months and sometimes years. Try not to dwell in self-pity. Rather, choose to be grateful. Support your church and give to the less fortunate. Stay in the Word and look for opportunities to share the gospel during potentially difficult times.
Rejoice in hope, be patient in tribulation, be constant in prayer. Contribute to the needs of the saints and seek to show hospitality. (Romans 12:12-13 ESV)
Also, be patient to look for investment opportunities. As prices fall, this may be a great time to purchase more stocks, buy distressed real estate or invest in a business whose competitors are struggling during the recession. This is when wise stewards often make their biggest financial long term gains.
My friend, Rusty Leonard, of Stewardship Partners, was trained under the legendary investor, Sir John Templeton. He was taught that the best time to buy a public stock is at the point of peak pessimism and the best time to sell is at the point of peak optimism. How true it is; but we typically due the opposite as we get tossed about by our emotions.
Since no one knows exactly when either of these peaks occur, be sure to seek Godly wisdom before buying or selling anything of value.
Recessions are a time to exercise what we believe. Read the Word, pray for wisdom and discernment, listen to the Lord and trusted individuals, and take action.
We should all practice Biblical financial principles whether we experience a recession or not. When we plan, are prepared, avoid panicking and operate with patience, we can minister to those who are frightened and take advantage of new investment opportunities.
Originally published on the Christian Post, November 1, 2019
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