6 Steps to Braving Recessions with a Cool Head, Calm Nerves & Clarity
#1: Don't buy into the headlines
Strategy:
Limit your news intake. Headlines are designed to scare us and attract as many eyeballs as possible. That clickbait can be toxic for anyone who takes in too much.
Put it in action:
Stick to one (or a few) news sources you trust. Limit the time you spend checking the headlines. Also, do not take the news as gospel, especially when making significant financial decisions.
#2: Resist impulsive actions
Strategy:
Think twice (or more) before making bigger money moves. Panic can snowball, especially when it feels like the bottom is falling out. Resist the urge to act immediately because it can lead to more mistakes, not sounder financial decisions.
Put it in action:
Ask yourself, "Why am I doing this?" and "Is now really the right time to make this move?" Give yourself time, like days or weeks, to consider significant decisions carefully and think how they'll affect you now and in the long-term.
#3: Run a worst-case scenario
Strategy:
Think about your biggest recession fears and what the worst-case scenario would look like for you. Then, troubleshoot it.
Put it in action:
Ask yourself, "Worst case, what could I lose in this or the next recession? What would I do if that happened?"
Running worst-case scenarios can help you see possible solutions – and maybe even some silver linings. That can put some of your bigger fears about a recession in a new light. It may even show you that your fears aren't as bad as you've built them up to be.
#4: Do a temperature check
Strategy:
Now may be the time to make some shifts or take a new approach. And you won't know that if you just keep things on autopilot.
Put it in action:
Carefully consider your risk tolerance, your investments, and how diversified your portfolio is. While you may want to make some changes now, it can also be smart to check in on your finances more frequently as markets shift. That'll keep your finger on the pulse of things, so you can keep your expectations and reactions in check.
#5: Make time to relax
Strategy:
Carve out time in your schedule to do activities that help you relax. Make that relaxation time part of your daily or weekly routine, even if it can't be on the same day every week or at the same time every day.
Put it in action:
Start simple with breathing exercises for 10-20 minutes a day. Of course, you could do anything you enjoy that gives you space to unwind and relax. That could mean exercising, reading, cooking, crafting, or learning new hobbies.
Whatever you do, taking the time to relax can calm your brain and clear your head. This can help you think a little more clearly, even when you start to feel recession anxiety set in.3
#6: Expand your outlook
Strategy:
Extend your perspective and start looking out past the next year or two. Opening up your outlook to the long-term can put current market conditions in context.
Put it in action:
Ask yourself, "Will I still have these recession worries 10-15 years from now?". Remember that recessions are part of healthy market cycles – and that over the long-term, market gains have historically outperformed their losses.
Since 1926, the S&P 500 has risen about 72 percent of the time year-over-year. So, play the long game and keep an eye on the horizon, as well as on the next step ahead.4
