Following up from last week’s discussion about recession and what it is, I’m back with Brock to talk about some strategies we can use right now to prepare.

Millionaires can be made during recessions. Opportunities abound for those who are able to take advantage of them.

There’s a few things we recommend:

• Have 3 months of minimum monthly expenses saved up
• Don’t bail out on your investments, but don’t check them all the time either
• Make business decisions logically, not just emotionally
• Don’t react to the panic!
• Invest in some technology to save you costs later

Finances can be scary to look at, but it’s especially important right now. We have 2 opportunities available to you to help!

Free 5-day Get Your Money Right Challenge: https://thefreelancecfo.kartra.com/page/GetYourMoneyRightChallenge

Brock's strategy session: https://thefreelancecfo.biz/consult-calls

We cover ALL of this in the “Get Your Finance Sh*t Together” self-study course at confidentmoneypodcast.com!

Join our community at confidentmoneypodcast.com where we’ll share tips and resources, and you can suggest topics for future episodes.

Enter to win a free strategy session with me!  Leave a 5-star review and include your IG handle to enter. We draw the winner at the beginning of each month. 

FTC/Affiliate Disclaimer: By using some of these links, at no extra cost to you, I may earn a small commission or referral fee, which helps me continue to produce content like this, support my business, and my team.

DISCLAIMER: I am not a financial advisor and this is not financial advice. My podcast is for educational purposes and is my personal opinion only. To make the best financial decision for your situation, please do your own research and if needed, seek the advice of a fee-based, fiduciary.

Music credit: Neon Fairies by Wolves 

A Podcast Launch Bestie production

Welcome back to the confident money podcast.

I'm your host, Caitlin Magnuson.

And we have Brock our tax strategist over at the freelance CFO here

with us again today for part two of all things recession, which

is such an interesting title.

But last week we chatted all about what a recession is, what it can mean

economically, what it can mean for you as an individual and what to expect.

And today we're gonna be chatting about the tangible.

And what you can be doing to prepare.

So, you know, actual steps you can be taking Brock welcome back.

I'm excited.

I'm actually really excited to be chatting about this.

Cause I think so many people go straight into anxiety and fear mode.

And for me, I think taking some action from a healthy place can

feel so much more productive.

Oh, absolutely.

And just make you feel more prepared.

I mean, like we kind of mentioned on the last episode, all of us that remember

the last one, um, you know, we have our guards up and we kind of know what

happened last time and we don't want, uh, maybe even if it affected us on

a personal level, we don't want those kind of things to, to happen again.

So there.

You know, I'm excited to talk about these tips that, uh, we can kind of

take in the preparation and know how to navigate while we're going through

the actual recessionary period.

Um, and just kind of know what to expect.

Of course we never know what to expect, but we have the history and history

repeats itself and so we can best utilize what we've already learned.

Going forward and I think that's probably the best place that we can start.

Do you.

Oh, absolutely.

No.

I, I think taking the info that we have and making some educated

decisions with it is really important.

And the way that we're gonna be laying this out today is, you know,

kind of a building block set up.

Right.

So we're gonna cover what we think is sort of the foundational

spot that all of us should be at.

And then we'll give you steps for cool.

If you have that foundation covered, maybe this is your next

step that you take to be prepared.

And then maybe this is the next step.

And if you've got all of those handled cool, we can have a little

bit of, I'm gonna say fun, right?

Because there can be, you know, millionaires can be

made during recessions.

opportunities are.

Yes.

They, they abound for people that are able to take advantage of them and.

I'm gonna just dive right in with the number one building block that you

and I were chatting about offline, and that's an emergency fund and there is

so much information out there about emergency funds and my take on it.

And I'm gonna explain why I recommend a little bit leaner

emergency fund than maybe a lot of other people recommend out there.

So what I look for is three months worth of average expenses.

So if you look.

Over the last, like let's say six months and take your

expenses, divide them by six.

That gives you your average monthly spending report.

Take that.

And you wanna have three times that so three months worth in.

I like a high yield savings account.

We will link a couple that we like in the notes of this episode.

and the reason that that's a little bit lower than a lot of

people recommend is because I'm a big proponent of most people.

If you lose your job, you're not losing all of your income.

You still would qualify for unemployment potentially, or you would

have a side hustle, or if you are partnered, you may have, you know,

a partner that has income coming in.

And for most of us, we have expenses that we could cut if we needed two and a pinch.

So that three month emergency.

For most of us can look like six to nine months.

And the reason I recommend a smaller emergency fund is because high yield

savings accounts while they can be great while they have higher interest than

say a traditional savings account, still don't generally keep up with inflation.

So there's an opportunity cost to having your money parked in

a high yield savings account.

And I personally would rather be investing that money.

Or putting it into areas that get a higher return that may not be quite as

safe or quite as stable or risk free.

But for me, three months of expenses makes the most sense.

Everyone needs to be doing what feels best to them.

And that may look like four months to you, or that may look like 12 months, but three

months is a really good rule of thumb.

And for most people I would not go under.

So that would be number one, you're working to build an emergency fund.

You're parking it somewhere safe in something like a

high yield savings account.

And once you've gotten there, you can move on with your finance journey.

Absolutely.

I think that you're, you're a hundred percent right there

because you don't want to.

Be too scared.

I think a lot of, a lot of what happens is people get very scared of

the stock market get really scared of their investments and everything.

And while we are going to go through a, you know, a negative period and your

stocks might not be growing, there is still opportunity to get in on some of

these stocks at this time that can, you know, really make a huge difference.

Later on, as we saw with COVID, there was tons.

Of areas of the stock market that just expanded, you know, I think, um,

obviously with the rise of technology and everything, you know, there's a

lot of companies out there who are more prepared than they were last time.

Um, and I think that companies, especially going through

COVID have kind of seen this.

And so they are kind of preparing themselves, as far as their labor

force and everything like that.

So you kind of mentioned.

That not everyone, you know, loses their jobs and they definitely don't.

And even sometimes when they do, they have protections there, um,

they get severances or they have employers are, or very understanding.

We hope that, that they're, they're a little bit more understanding.

It's not as, as cutthroat as it was in the last recessionary period.

That being said, you have to have that emergency fund up because.

Anything and everything can happen during a recession as, as we've seen.

And, you know, we all saw what COVID did to us.

The effects of a recession really are, you know, just so strong in every

market that you know, we really just don't know exactly what's gonna happen.

And I, and I agree that having too much of your money pulled aside, um, and

stockpiled doesn't help you out, you know, We need to look at the recession as an

opportunity, as well as a detriment, um, you know, while we are prepared for it

and, um, ready to combat it, we also want to take from it and get the opportunity

because a lot of businesses can really thrive later on by, you know, navigating

it right at the beginning, you know?

And, um, let's learn from the mistakes that we made in the last recess.

No.

Absolutely.

And I know you and I were chatting Brock offline about what we expect

from a lot of large cor corporations.

Right.

And we saw some of this during the pandemic.

We saw a lot of corporations that moved towards, you know, eliminating a lot of

entry level workers in a lot of arenas.

Like you have, um, oh my God.

Self-serve checkout.

You have, you know, where it decreased the number of cashiers

that were needed at a lot of places.

And I think we're gonna see additional technology that continues to do that.

And I think that a lot of us that are business owners should be doing

the same thing regularly, that a lot of the larger corporations are

doing in as much as we are looking at inefficiencies and we are assessing our

products, our services, our team, and you know, what we bring to the table.

Two, and I really hate this phrase, but I don't have a better

one, but to trim the fat right.

Is a really common phrase.

And to basically eliminate the, the fluff, the things that aren't needed

in your business, maybe you haven't raised prices in a year or two.

Especially with inflation, you're making a lot less than you were making, you

know, are you sure what your products or services that you're offering?

Are you sure what the most profitable one is?

And , I've told this before, but I had a client years ago that had a

product that she was going to eliminate because it felt old, it felt sale.

She'd had it around for five or six years and we looked at it and not

only was it her best selling product, it was her most profitable product.

And so looking at things from a financial perspective, instead of just

an emotional perspective, I think can be really important as business owners, but

also as individuals with our finances.

Right.

And I think Brock when I know, cause I've read a couple of articles

on it, the psychological hit.

If you go look at your investments or your retire, The psychological hit

of seeing them go down in value is so much greater than the positive,

psychological impact of seeing those grow.

it's gonna sound a little bit like head in the sand here, but to an extent during

recessions and even for a while after I wouldn't be checking your investments all

Nope.

If you have a good method, like once a quarter,

I second that and given that we're coming up on Q3, um, Q3 typically is just

not a great quarter for the stock market.

Um, so we're already kind of preparing, I typically like to start my year,

end planning around the end of Q3.

We'll see where we are with the recession then.

Um, but I agree When we react to panic and we start pulling everything out and

everything, you know, the, the negative repercussions are quicker and they grow.

And I think that with you talking about, you know, kind of the trimming, the

fat in everything, that's absolutely.

We need to look at this as a reevaluation period.

Maybe, you know, the great revaluation of our business, our practices, our costs.

And it's not necessarily when we say cost cutting, we don't mean cut your offerings.

We mean, Offer them smarter, offer them at a more cost advantageous perspective.

I mean, look at the different opportunities out there.

We have seen such technological advancements since the last recession.

And while some of those technological advancements have led to a reduction

in the workforce in certain sectors, they have opportunities there for other

businesses and especially small business.

You had mentioned kind of like self-service and everything like that.

I mean that, and we look at customer service roles.

We look at the app development, you know, on our phones and everything.

We didn't have these options the last time.

So.

I would say now more than ever is a time to look at your technology and

look at your opportunities there.

And if you have the ability to kind of start to invest in that technology to save

you some costs later, um, you know, even three months down the road, six months

down the road, a year down the road, you're gonna appreciate the time that you

took now to reevaluate and look at where you have the opportunity to kind of go.

Utilize technology and combat some of the costs that you could

be incurring in the future.

Of course I never like am a big proponent of increasing unemployment,

um, by, you know, reducing your workers of your small business.

How would, um, however, you know, sometimes that is a

necessary consideration.

If it's something that your business has to go through, be prepared, know what,

know what you have in front of you.

And that's why I love freelance CFO, because we can go in there, digest

your financial position right now, know what your goals are for the next

year, know where you're at in, in the process of achieving those goals and

know what, you know, the set back of a recession is gonna have maybe on your

business, how it's going to affect.

And I think that this is the.

To really get in there, get into your finances, both business and

personal, get comfortable with them.

So you know, what is coming ahead of you?

So, you know, like you had said, get in there, make sure you have your savings,

make sure you really do understand what your three month, cost is because

I think a lot of us understate it.

I think a lot of us overstated it.

I.

even, there's, there's a lot of times that, you know, you and I spend our

whole day in finance and then there's some days I, you know, I'm like, I

need to reevaluate where I'm at just personally and, and look at things,

make sure that I'm fully prepared.

And I think the thing that we saw on the last one was that panic and.

Panic drives us to make rash decisions and everything like that.

And really, we need to take this time to make educated decisions.

Absolutely.

I couldn't agree more.

And I think so step number one, being that emergency fund.

Step number two, being gaining clarity, right?

Whether you're a business owner, whether you know, you're not a business

owner and you have personal finances, I think understanding and something

that we've both been recommending to clients recently is identify, identify

your expenses, your income, get comfortable with your numbers so that,

you know, you don't necessarily have to change your spending habits, right?

This second, right?

If you have your emergency fund, if you feel like you're in a, a relatively

good financial position, I'm not saying.

Stop getting Botox or stop going and getting a facial or, you know, shopping

at whole foods or wherever you want to go, but you can identify things that

might be discretionary spending for you instead of necessary spending that.

Should you need to decrease things you already have that sort of list that can

empower you to make decisions versus.

Oh, my God, something happened.

I'm stressing out.

The recession is here.

What do I do?

You already have a plan?

You have your emergency fund.

You know what?

You can cut if you're feeling like you need to cut something.

And then I think step three Brock you touched on is number one of step three.

So 3.1, we're not making rash financial decisions, especially

with our investments, I think.

And I know that so many people in 2008 that panicked and pulled their money.

Had they left their money in there.

It would've taken, I believe it was less than six years to have fully recovered.

And then it would be significantly higher than what it had been now.

So by pulling that money, when you, when you put money into investments, stocks,

you know, EFTs, et cetera, I think of it a little bit as monopoly money, right?

Because what you put in does have a cost to you, however,

any of the increases you see.

Are only hypothetical until you withdraw the money.

Any of the decreases you see are only hypothetical until you withdraw the

money and make either of those real.

So if we can hold off, I'm assuming if you're listening to this podcast, you're

probably not of retirement age yet.

You're probably 10 years or more away from retiring.

If that's the case.

the stock market has always recovered over any 10 year period.

So it sucks.

It's a little uncomfortable.

We don't love it.

It feels uncertain, but the goal here would be to not change your investing

strategy through the recession.

You continue to invest because if anything, right now, if you're in a

financial place, stocks are on sale.

So you can buy in at, at lower rates.

I will be continuing to invest at the exact same rate that I've

been doing for the last three.

Exactly like the other thing that we we see right now is the

importance of diversification in the stock market that really not having

all of your money into one thing.

And you know, of course I'm no stock market expert or anything.

But the diversification is so important right now, so that you do kind of

have that flexibility and you can take some hits in different areas.

And like you said, that stock market will recover, it absolutely will.

Um, and I almost think of it, what we're going into kind of like a credit score.

If the stock market's really high and we have, you know, things are going.

Something like a recession or a cut is going to drop that so

significantly, but we don't have a great credit score right now.

Our stock market has really suffered, you know, through

COVID in the last couple years.

So this recession isn't going to have the same effect that it

did last time, at least not yet.

Um, and so, you know, that that drop isn't going to dramatically

hit us as hard as it did last time.

And so I think that shock that you, that you're, um, that you

mentioned of us looking at our investments and looking at that drop.

Yeah, it is.

It's a lot and it, it feels like dollars just getting pulled from

your pocket, but you, you know, when you're in the stock market,

you have to remember it is volatile.

And it, you know, it goes up, but it come, it comes back and it, again, a

lot of the smarter business owners out there are looking at this as opportunity.

So get out there, look at your investments, look at

what you're interested in.

I think this is also a great opportunity for individuals.

I think if you were considering looking at doing something on the side, this is the

perfect time to have a side gig, a side hustle, whatever it may be, or, you know,

if this is like you were waiting for that thing to kind of tell you, you know, what

let's go forward with with my passion, I would, I really wanna get more into this.

I wanna get more into this.

This is a time to invest in yourself.

Most certainly.

I think that, Looking at, you know, the different options out there

and everything, and, and knowing that we are in a time that we're

gonna, our needs are gonna change.

Look at how that relates to you.

Look at that.

However that relates to your business, make informed decisions with your

business now, and you'll get through this.

No, I, I do think that this brings a

really good opportunity and we.

it, what you said reminded me a lot of the seasonality that I chatted about

in an earlier episode and there's seasonality to everything, right?

There's cycles, there's seasonality.

I notice it in my energy a during the month B during the year, but this

is on an even larger scale, right?

We see periods of a lot of growth and all, and the doing and all the

things and recessions are kind of that period for lack of a better

term of kind of rest and rebuilding.

And it can be scary and it can be horrible for some people, but as a whole,

it sort of allows us to reconfigure a lot of what COVID did as well.

Right.

Allowed a lot of us to sort of reconfigure where our priorities

are, what we wanna be doing, uh, how we wanna be making our money.

And it also a little bit of.

Fear or uncertainty, I think can be healthy for our finances and ourselves,

because it does push us to diversify.

It does push us to not, I'm gonna use a chicken one here to not have

all of our eggs in one basket, right.

Because we want to have stability whenever we can, you know, humans

want

There's a lot of sectors that are gonna get hit harder than others.

You know what I mean?

But you know, kind of like what we were talking about.

I think a lot of businesses, because they've just gotten beaten so hard

through the last couple years.

Are ready for the fight.

You know what I mean, are ready to, to combat this and have the tools available

that they either gained or learned about, um, in the last couple years.

And this is the time that those really come into play.

I mean, really understanding, um, how your business operates and, and

where your, your necessary costs versus your discretionary costs.

Lie, um, is, is a huge thing.

And really being able to budget out and project out your income to

know what to expect going forward.

If you say, you know what things are going great right now, but say we have

a decrease in income of X percent, you know, how is that going to affect

just the general business operation?

How can we better prepare for that now?

Um, rather than dealing with it, head on at, you know, in three months, six

months, two years, whatever it may be.

And.

There couldn't be a better time to really dive in, understand your

finances personally, professionally, and, and your family in general.

You know, I, my parents are a little bit older now than they

were in the last recession.

And so retirement can be scary.

Retirement's, you know, terrifying for all of us anyway.

But if you are age with a lot of the, the boomer generation and everything,

getting close to retirement, Recessions push people into retirement, you know,

um, a lot of times just like we saw with COVID, you know, people made that

decision a couple years earlier than they, than they probably would've before.

And are we, you know, are you ready for that decision?

Like, can you make that decision right now?

Um, and getting a, a, you know, a great look at your finances can help you

determine that, um, But it's all about understanding them and, and making sure

that you're looking at all the avenues look at the potential costs or the

potential effects of this recession.

Um, but just another reminder why it's important that we, you know,

have a full understanding of what's going on financially in our lives.

Right.

And I think that for us, well, not for you and I, but for us generally.

mm.

And

finances can be shame filled.

They can be scary.

They can be something that we avoid.

We don't wanna look at, we attach stories to them.

Yeah.

Especially with debt, everything else that comes through, you just don't.

Do you have enough money and you're bank account to pay

for what you need to pay for.

Okay, cool.

Maybe we don't look further than that.

And I'm challenging anyone listening to this that doesn't know their

finances that doesn't check their bank regularly, or that doesn't

know where their money's going.

We have two really great offerings for you.

So, number one, if you haven't signed up, we have a free five day

money challenge on our website.

It walks you through some really basic steps in less than 15 minutes

a day, where you will have a much better grasp on your finances.

Number two, and we're gonna link both of these in the notes here.

Number two, Brock is doing financial strategy sessions with our clients

and with anyone that's interested over the next couple of months before we.

Head first into tax season preparation.

So they are going to be limited over the summertime.

If you were wanting an outside opinion that can look at where you're at

financially, you know, maybe you have business finances, maybe you're in

corporate and assess and give you kind of, you know, the green light,

the yellow light, the red light with some action steps for improvement.

I highly recommend booking one of those over the summer so that you can decrease

the anxiety and the stress that you feel about where we're at right now.

And instead can feel like you have.

The confidence that comes with an action plan and clear steps moving forward.

absolutely just navigating through this recession, knowing that you do have,

you have safeguarded your assets, you've safeguarded, your family and everything

that, that panic doesn't really hit you the same way it might hit others.

Um, is, is immeasurable.

I think just, you know, having that security and feeling aware and in,

in, in the know of your finances and your comfort, um, is just so critical.

Caitlin and I have really felt, um, felt less recession, uh, coming out of

school, going through college, getting into the, you know, the corporate

world and now into working with so many small businesses and everything.

We have a little PTSD, so we, we, I don't wanna say we over prepare,

but we definitely don't let.

Things kind of slip through the cracks.

When we, when we consider, what do we need to make sure that, you know, we

get through this and that we can, you know, we can keep our, our head above

water and also, you know, keeping your head above water, but being able to see

those opportunities and grasp at them, um, when available, because we might as

well make money from this, if we can.

Right.

Um, that I think this strategy calls are really going so well so far.

I think people are really bringing up a lot of questions, um, that are great.

And we're really looking at a lot of different avenues that probably we,

you know, might not have looked at.

Um, had it not been in this, uh, pre-recession period.

I think it's a, you know, it's a great time to start the conversation.

Absolutely.

It feels, uh, a little spring cleaning ish to me, which I,

I actually really like, right.

Um, yeah, I've, I've been doing it in my house.

We've been doing it in our business and, you know, looking

at what makes the most sense.

And then also that leads to me doing it in my personal finances.

And so I think being able to do this for our clients and for our listeners

here is really fun because I mean, okay, that's why we do what we do, right.

Because we think it's fun.

Not everyone does.

Um, but not everyone gets excited about retirement or taxes E either.

And with that, I think that we have a really unique.

Skillset in that we get to see the behind the scenes of so many small businesses

and so many individuals, finances that, you know, you might talk to your

friends and you might get a feeling for where your friends are financially,

but like, are they being truthful?

Are you getting the full picture?

Because there is there.

Right there.

There's shame.

There's keeping up with the Joneses.

There's everything that comes into like those interaction with friends

and family versus having someone that's like, Hey, I've seen 20 other

people that are in a really similar circumstance where you are financially

business Lifewise age-wise et cetera.

Here's what we've seen work for them because we get to pull such

a larger sampling of people that are in, you know, similar age

ranges, tax brackets, all of that.

And it makes it fun because it almost feels to me like.

we can we get the cheat codes to an extent for it, right?

Like we, we get to see what works and we get to pass that along,

which I think is really valuable.

So,

The, the one I, I heard this quote, uh, years back when I was in college.

Uh, and I don't know it exactly, but basically it just, it, it says,

you know, there is so many languages of business, but all languages,

you know, Talk through money.

And so you, you know, really going through the numbers of your business,

it's gonna tell your story, regardless of what industry you're in, everything,

we can look at past data and kind of help project what the future is gonna

look like and, you know, prepare for, um, different scenarios and everything.

And I think that, uh, we're walking through that with some of our

clients that we've done in the past.

I think has been, you know, so valuable to them because they can

really feel so prepared and confident.

Um, the recession is not a time that you wanna kind of feel, you know,

discouraged or, or scared or panic.

You know, we wanna go through this and be like, Hey, we're prepared.

This is what we're gonna do.

This is our plan.

And, and, you know, come up the other side and I think.

Despite what kind of business you're in, we can help you go through

fully understand it and, and really prepare yourself just in general.

Um, there's and there's, there's so much to a recession, um, that there's just

a lot of different areas to look at.

Uh, but in general, you know, making sure that you're comfortable with your

finances is, is at the foremost priority.

Mm.

Absolutely.

I think, you know, There's the saying that money, money can't buy happiness.

However, I think money can buy a lot of freedom, a lot of access.

And I think that for those of us that may have issues with, well,

I don't wanna be rich because you know what, X, Y, Z, through

stories we tell ourselves around it.

I think that taking some time to step back and examine what access to money provides

for you, your family, your partner, your loved ones is really important.

And I think it allows a lot of us to make.

A little bit less emotional decisions when we're looking to make changes in our

lives, because it is money's emotional.

We have all of, all of these hangups that come with it, or, you

know, all of these things we've been told stories we've been told.

So I know that the idea of a recession can be scary.

We look at it.

As a potential for growth as a potential for reconfiguring, for

streamlining, for efficiency, for just feeling aligned in your life and

in the direction that you're going.

And as it having the potential to really boost you forward financially, right?

Buying stocks at a discount or on sale, or however you wanna look at

it, um, setting your future self up for success and just continuing.

And I know that investing for the long term is not sexy.

Right.

Putting $300 or a hundred dollars or whatever it is a month towards

investments every month for every year for 30 years is not, it's not

the get rich quick scheme that we all really would love, but it's consistent

over time and that's what matters.

And so I think doing that with all of your finances is good.

Absolutely.

Absolutely.

And I think that we need to approach this recession, not so much as a

nightmare, but as you know, the great opportunity and let's come out of this

stronger than when we started, you know, let's, let's learn about our business,

learn about where we wanna see our future and do what we can to attack it.

Now, I think, the idea of, long term investing it's not a get

rich quick scheme, but you don't wanna get rich quick scheme.

You want something that is sustainable, something that's gonna be there in

the end, something that protects your family and something that's informed.

Making these informed decisions is what gets you to the finish line.

Absolutely.

I couldn't agree more so reminder to everyone.

The five day free challenge is gonna be linked in here.

The sessions with Brock will be linked in here as well.

They're going to be happening over the summer.

No guarantees once September hits, because that will be subject to availability.

And if you want to feel more prepared, If you want to better

understand your finances, go take a look at one or both of those.

They're great resources Brock.

Thank you for being here for part two of all things recession, we're gonna be

chatting next week about student loans, which I'm really excited for as well,

which is again, a weird phrase to come out of my mouth, but looking forward to.

Thank you so much, Caitlin.

I look forward to it and, I'm so excited to start the conversation

and, and get through this recession and change the outlook.

Yes.

No, I think that's great.

I love that.