Recession Vs Inflation: Fears, Facts, and Tips

by | Jun 30, 2022

If you’ve been watching the news, you’ll know that current inflation and the fears of an impending recession are on everyone’s minds. It’s true that these economic worries can and probably have impacted your financial health. Scarcity wants you to believe all of the gloom and doom. It is important to hedge for economic downturns (that’s always the case!) and to know the basics around a recession vs inflation. Today, there’s no unnecessary need to assume the worst is yet to come. Let’s take a closer look at what’s going on, and what you can do to protect yourself throughout the coming months or potential future economic slowdowns. Keeping a healthy money mindset and knowing good practices to follow in a bull market (aka a market downturn), a bear market (aka a healthy and growing market), and anywhere in between is key to continuing to build the financial life of your dreams. 

Breaking it Down: Recession vs Inflation

The inflation + recession combo can feel like burning a candle at both ends. On one side, your funds are being used up by higher-than-ever costs of living. On the other side, a recession typically represents two quarters (six months) of negative growth in the economy. While both are bad terms in economics, just because one (inflation) is high doesn’t mean the other (a recession) will happen. Both can hurt, but in slightly different ways

If you haven’t already, you’re likely to see inflation hit your bank account. Gas prices, groceries, and common goods are more expensive, and all those things add up quickly. Right now, inflation is the highest we’ve seen since the early 1980s (before you were born possibly!). Whether you’re seeing that hit you at the gas pump, the grocery store, and practically everywhere else—it’s no secret that our wallets are taking a beating. 

Recessions represent negative economic growth, and they occur about every 4.5 years on average and last about 18 months. The impact of recessions typically includes higher unemployment and lower house prices. Still, every recession is different, and most experts agree that any recession we experience in 2022 will be mild compared to the recession of 2008. While recessions are a regular part of the business cycle, and a big recession is unlikely this year, the idea of a recession can feel scarier when coupled with higher inflation. 

Major economic changes are bound to trigger a reaction—and it’s done just that. According to recent polls, pessimism about the U.S. economy is at its highest level in 50 years amid decades-high inflation rates and rising interest rates. Fear and pessimism about the economy can easily dampen anyone’s money mindset. It can be so easy to slip out of an abundance mentality and into a scarcity mentality.  For you, today, my request is to do your best to not freak out, sell everything and try to live off the land.  With my money best practices, you can navigate the murky waters of 2022 and know the difference between a recession vs inflation.  

Economic impacts from world and national affairs can absolutely play an enormous role in your financial health, but your worth comes from YOU. That means this: continue to invest in yourself—your education, your business skills, the things that make you happiest, etc. FOCUS ON MAKING MORE MONEY.  For women today, this is our best chance for economic success.  Without a crystal ball, we cannot see the future. Instead of trying to predict when the recession will hit, keep a positive money mindset and know what to do no matter which direction the economy is headed. 

Let’s take a look at a few ways to keep your money safe and your sanity through both a good and bad economy:

Recession Prep Money Tips

  1. Reduce your debt – Besides a mortgage, any debt that you carry (especially high-interest credit card debt) can drain your cash. Whenever a recession is looming, it’s important to lower the burden on your monthly expenses, and that includes debt and those infamous interest rates. 
  2. Boost Emergency Savings – When common household goods cost more due to inflation, emergencies can cost more too. Prepare for the potential higher cost and bulk up your emergency savings. 
  3. Track and Rebalance – It’s key to track your money at all times, but especially during an economic downturn. You will notice the numbers in your bank account going down; it’s time to determine exactly what is costing more in your household right now. That will help you make the best decisions about what to cut, what to keep, and where to invest more. That’s right! Low market prices mean you have the opportunity to buy more shares of a fund and see greater potential growth when prices rise. Just remember to only invest what you can afford. 
  4. Focus on the future, not fear – keeping a positive mindset will be your saving grace during any downturn, financial or otherwise. The economy is cyclical and will bounce back. Your fears are real, but don’t let the fears dictate your choices.

What to do in a Growth Economy 

  1. Don’t get caught up by the shiniest stock – When it comes to investing, it’s important to create balance in your portfolio. More towards making quality, long-term investments, so you are prepared when the market starts to go down again.  
  2. Live within your means and focus on making more money – I get it.  We want what we want.  Having been inside the depths of hundreds of bank accounts, what I do know is that there is likely frivolous spending that you can shift into mindful spending.  Making aligned choices about your money when it’s flowing will leave you with more protection against all future financial challenges.  

Facing Inflation and Recession Fears Together 

Even though everyone is affected differently by inflation and recession issues, you’re definitely not alone if you’re feeling fear these days. The beauty is that you don’t have to figure it all out alone. I am here for you! If you need help getting your $hit together in a way that works for YOU, sign up for my next GIT Elevated Money Course today! 

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