In 2008, I was in Malaysia working for one of the biggest banks in Asia. It was also the year the world of finance crumbled. Lehman Brothers closed. The real-estate market turned upside down. The stock market plummeted. The world was in chaos.
Suddenly, the BIG banks are going bankrupt left and right. The companies we thought would never fail, suddenly looked like a beggar begging for bailouts.
The impact to employees was direct. Companies closed down. People are retrenched.
Security from employment ended.
I remember vividly when one by one my workmates were being told that they are being let go effective immediately. I remember my friends worrying about going back to the Philippines, or staying in a foreign land without a source of income. It was a devastating blow for a lot of people.
That day I was fortunate enough to weather the storm.
Fast forward 14 years after, the prospects of financial security is again getting a beating. High inflation is one. Gas prices are skyrocketing. Food prices are going up. Transportation costs are getting higher.
The only thing not going up is your salary.
The big companies have been down since the start of the year. S&P 500 is down 13%. NASDAQ is down 23%. Apple is down 17%. Facebook is down 42%. Netflix is down 67%. Amazon is down 32%. Google is down 23%. Tesla is down 37%. Bitcoin is down 38%. The US has posted a negative growth rate in the first quarter, another negative growth this second quarter which ends June 30 will put them into recession.
The prospects for this year is not looking good. You may think, well that’s the U.S., but realize that the same is happening to many countries around the world. In the Philippines, gas prices have skyrocketed. Inflation is now at 5.4%. The exchange rate has breached P55 to 1 US dollar.
Be prepared. Things may change from bad to worse in an instant. I’ve seen it happen in 2008. The coming months and years will be a time of significant change. For those who are prepared, those who had financial discipline and positioned themselves well, it could be the best of times. Opportunities will present themselves, but only to those who can see them. Opportunities are not seen by the naked eye, but through the discipline of the mind and the wisdom of learning from your own experience and of those who have come before you.
That’s why it’s important to LEARN, so you will see the opportunities. So what can you do today to help you prepare? Here are 5 things you can do:
1. Keep cash. Cash is king. Save as much as you can. This will help you in case your source of income whether that’s from employment or a business suddenly gets shut down, or becomes unstable.
2. Stay away from BIG purchases that require long-term commitment like real-estate loans or car loans. When central banks raise interest rates, the cost of borrowing goes up and the interest rates for loans goes up as well. It will be harder to take out a loan and the interest will be higher. Also note that loan interest rates sometimes get repriced.
3. Keep your job. Now is not the time to quit. I know there’s a great resignation happening. But I also know, some of the companies have stopped hiring, and the contract of those newly hired got rescinded. Others have even let go some of their employees.
4. Start a side hustle. You know that your salary from your job is fixed. You can wait for the raise but it’s hardly going to put a dent on your bills, or even catch up with the rising prices of goods. Where do you start? Learn to sell. Sell anything. Start with what you have. Take inventory of what you have in your life, what you are good at and where you are, and look for opportunities to create another source of income in your part-time. I managed to do it in 2011, and that source of income is still providing me income up until today 11 years after.
5. Keep on learning. Information is readily available today for FREE. Youtube and google are your new library. There’s no excuse not to learn about money when it impacts all the things important in your life.