Eventually, How You Survive the Recession Depends on Your Financial Intelligence

I once asked by my reader in my other blog - When do you think the recession will end, and how?

I really am having a hard time to answer the question. So may opinions from experts and public, as well.

To tell you the truth, I can’t imagine how the recession will end, and when will it eventually ends.

Some experts say that the recession will peak within 2 or 3 years, and things will improve gradually from there - so, rough road ahead.

Regarding how the recession will end, here’s an interesting estimate - According to this article, the average recession lasted for 10.8 months. Therefore, according to the data, on average, the recession should end last November 2008, and the longest would probably ended on April 2009.

Not exactly the case, in my opinion. Why?

Negative sentiment drive today’s recession more than before

I think that today’s recession might not be your typical recession. The emotional turmoil is as bad as the economic turmoil, in such a way that people left with unsecurity, uncertainty and negative thinking.

Even though the economy is supposedly rebounded on November 2008, the economic downturn inertia will lengthen the recession, even beyond what’s estimated as the long recession mentioned in the article above, April 2009.

As a non financial expert, but a self-made student of human behaviour, I view the recession will go well over April 2009, and will reach the peak on mid or late 2010.

I’m not sure, but neither the expert.

The best survival tool: financial education

Regarding how the recession will end, my answer would be this:

As everything in life - such as the ripple in a lake decreases when the wind speed decreases - after the panic, buzz and negative sentiment sustain themselves in people, the recession will gradually peaked and the economy will rebound - all with viral effects, as sentiment is contagious; The positive outlook of the economy will gradually, in itself, improve economy situation.

The question: How to accelerate economy sustainability?

The answer: As people start to gather themselves and start to learn from the situation, their financial intelligence increases gradually, and the new understanding will accelerate economy recovery - eventually.

The availability of money guides and money information, especially online, will help people to learn better, faster.

Nowadays, the phrase “Time is money” has never been this true before - the faster people learn, the sooner recession will end - the knowledge will set you free.

Image by emdot.

Your Biggest Asset: Your Mind, Financial Knowledge and Information

People often forget that their biggest financial asset is not money, stocks, bonds, real estates or business. Your and my biggest asset is financial knowledge and information.

It is heartbreaking to learn that people work hard for years only to trust their money blindly to the so-called fund managers of mutual funds.

Not that mutual funds and the likes are bad - but it is about time that people start to put their money to what matters most - financial education.

The premise is, if you have the right education, you can control your financial in whatever your personal financial endeavours.

Why you need to invest your money and time to obtain financial education and information

Your mind is your biggest asset - your mindset, what you know, and what you believe can command your decision making.

What many people experience in today credit crunch and financial slumps is mainly due to their lack of financial knowledge and information. Lack of these commands your decision making quality, as people act according to the reality they have in their mind.

Well-informed mind will result in well-thought decision making, and this includes decision making that involves money.

How the lack of financial education affects you

Many personal bankruptcy stories are evolving around people that lost their money due to the stock market crash. The most irritating thing is, they lost their money not because of their bad investment decision, but because of their blind trust to fund managers to manage their fund.

The truth is, it’s not the fault of the fund managers - they do whatever they can, but the money owners themselves, for their lack of financial knowledge and information.

The moral of the stories is that people should regain control of their money - they have to decide where to invest in what, and when.

That is achievable through proper financial education, that can comes in many form - courses, seminars, mentorships, and many more. Unfortunately, those could cost you hundreds to thousands of dollar.

Fortunately, there are large amount of free resources available, thanks to the Internet

The best thing of the Internet is information. You can access finance articles, such as loans articles, personal finance articles, and other finance-related articles.

However, the Internet is so flooded with information, that you can get yourself biased due to the pros and cons, as well as different perspective of a financial issue.

The best way to choose which ones are the right ones for you, you can consult finance forums for recommendations, as well as, of course, visiting financial authority sites, such as Financial Times’ FT.com. Visiting finance section of large networks is also a good start - sites, such as Yahoo! Finance, CNN Finance, and other similar sites can offer you credible information that will help you in your personal finance endeavours.

Conclusion

Every single person should take care of their own financial welfare - The Government can’t do that for you. Your boss can’t do that for you. Your parents can’t do that for you. You have to stand up, take responsibility of your personal finance management.

Learn as many as you can, as knowledge will set you free - literally.

Image by Duncan Rawlinson.

Next Entries »