Today, I shall share 2 of the most common misconceptions about recession, based on my readings and interactions with fellow friends, colleagues and family.
Misconception #1 - All is lost
In many people'e eye, recession is about gloom and doom.
It is about people losing jobs, people more likely to default on credit card loans and mortgages.
My take is that these common people have got it all wrong.
Recession is about taking stock of your life. It is the taxi ride home after a night of clubbing. A time of peace when you can, and you should stop what you are doing, and review your actions over the past few years of good life.
The amount of money spent at high end dining restaurants, was it that worth it?
That car that you purchase, was it really neccessary (especially in countries like Singapore)?
If you had been retrenched, and unable to find a job, do not fret. Because excessive worrying only bring wrinkles, not solutions. Your newfound time can be used to catch up on the family time that you have lost while working long hours in the Rat's Race. Watch your kids grow. Communicate with them and understand them like what a father should do.
Do not worry about things you have no control of, just take action on things within your control.
Every problem creates a great opportunity. Have you considered about being your own boss? Or branching out to work in an area that you have always wanted to do (volunteer work? nursing? teaching?) but never had the chance to do because you have been in the same industry for too long?
Bad times call for creative measures. Live life like you never have, and you will obtain intangible rewards that no one else will get.
Misconception #2 - Save as much as possible
This is every poor man's concept - save when you are running out of cash.
Obviously, one cannot be faulted for thinking this way, because it seems the most managable way to avert a bankruptcy and sleeping on the streets.
What is wrong is the objective - you should not be out to cut cost as much as possible, but to have as much money (and assets) as possible.
A simple mathematical equation looks like this.
Savings = Income - Cost
So to increase savings, you can not just cut cost, but also increase income!
Increasing income is near impossible if you are just relying on one fixed income job. You need to create multiple sources of income. You can do that by taking a supplentary job like teaching tuition, helping out on weekend expo fairs or doing freelance jobs. Or you can utilise your brain by venturing into online sales, doing buying and selling.
As Robert Kiyosaki has always said, you can make more money as long as you use your biggest asset - the brain. Recession is the perfect reason why you should spend less time on TV to make your life better and more stable.
Think about it.
The best time to improve your life is not tomorrow, its today!