How to survive an economic pandemic depression

With the current pandemic crisis and economic issues (pension, oil crisis, massive over printing of money to bailout big corporation) there are rising speculation that we may be heading for another depression. The last depression happened in 1929, which lead to bankruptcies, huge unemployment rate, bank closing down, hyperinflation, lost of homes, and a social collapsed.

Looking at history, the economic collapse were usually caused unregulated and bad practice from the financial industry and the government. These would creates bubbles and debt crisis which leads inevitable economic collapse. Reg flag of a coming crash are high unemployment rate, stock market collapse after trading at an all time high, national debt, growth in governmental debt and problem with leadership in the government.

If a depression were to happen, it would not be how it was in 1929 due to the drastic changes in social structure, globalisation, technology, banking regulation and the greater responsibility that the government has to provide financial support for the public. Furthermore, the nature of a pandemic limits the way the market can recover as non-essential industries being restricted. This may change if herd immunity becomes successful.

Here, I will make a list of things you can do in preparation prior the depression and what to do during the depression. Please note that I am not an expert and these are information I have gather through various sources.

How to prepare for an economic depression?

1. Work hard, have an emergency fund and liquidity:

Work hard before the storm. Accumulate as much savings as you can whilst the economy is healthy. One of the most important thing is to have an emergency fund. This fund should have enough to cover the living cost for ‘maybe’ 6-12 months. Knowing that you can pay your rent and bills within that period of time will give you a sense of mind and security.

Another way of spending your emergency fund is having enough cash to pay for transportation in order to relocate to another country or town where there are job opportunities.

Keep as many assets as liquid as possible so that you can withdraw them within a week. Having adequate cash in hand is useful.

2. Pay off your debt:

Having debt in loans or credit card will eat into your savings. This become very problematic if you lose your job, especially as it is difficult to find jobs during a depression.

3. Cut down expenses by downsizing, budgeting & being a minimalist:

One of the most biggest expense is rent or mortgage. Being able to reduce the expense will significantly help you. Try to find a cheaper accommodation, consider downsizing if necessary or move with friends or family members.

It is so important to know the difference between want and need. Cancel any unnecessary subscription if possible. Learn to budget, and avoid avoiding non-essential purchasing. Look for discounts when buying essential goods. Tip is to by essential goods in bulk for a discounted price.

Resell any unnecessary things you don’t need. It is a perfect time practice living a more minimalist lifestyle as it’ll be good for your finances as well as your mental well being.

4. Stock up on essential supplies:

Ensure you have adequate essential goods such as food with long expiry date, water supply (or purification devices), sanitation supplies, first aid kit and medical supply. To ensure food do not get expired, organising food by placing the shortest expiry date in the front. Nuts, seeds, beans and vegan protein powder has long expiry date and is very nutritious.

5. Learn to be more self sustainable (growing vegetable and preservation):

During a depression, currency may lose it’s value and supply chain may be disrupted. It is essential that we become more self sustainable and self sufficient. Learn to grow your own vegetable in your garden or window sill. If you can, grow it in a community garden or get together with friends and rent a land to grow crops. Having these system in place early will help you be prepared when crisis does happen.

Other sustainable skill is to learn now to preserve food using various techniques such as dry freeze, pickle or canning food. This can help you stock up for winter seasons and it is also a good way to barter trade. Make sure you know how to save seeds from each fruits and vegetables.

Have survival equipment such as lighter, axe, water purification device, solar powered lamp, portable generator and camping equipment.

6. Strength your bond with your family, friends and community:

In difficult times it is very important to maintain a strong bond with family and your community. Building a safety net for each other brings comfort and a sense of security. Family will always have your well being in their interest and will be there in times need.

Keep connected with your friends and check up on them often. Build or join a community around you. Get to know your neighbour better and looking out for each other. They could also be people you may barter goods with or form a neighbourhood security watch team. If you are religious, consider joining a religious organisation. In times of trouble these religious community tends to support each other.

7. Learn new a trade or skill set:

During a depression, jobs will be very difficult to come by. Consider learning new working skills that is depression proof whilst you have the time. Also consider skills that is useful in a traditional economy such as agriculture, recognise wild edible, cooking, preserving food, repairing, plumbing, carpentry. woodwork, sewing, knitting, bartering, accounting etc…

8. Have a plan B (if you lose your home or savings):

It is smart to have a back up plan in what to do if things goes very bad, such as losing your home or depleting your savings. Have a discussion with your friends and family to organise a plan on what to do if such event would happen. Agree to let them stay at your place under such circumstance and vice versa.

9. Ensure you have a valid passport:

Make sure your passport is valid with long remaining time in case you need to leave the country in a short noticed or need to relocate yourself to find job. Research and visit target countries on your vacation so you are familiar with it. Also bare in mind that flight may be banned due to pandemic.

10. Work on your stoic mindset:

The idea is to practice self-deprivation during good times to prepare for difficult times. This gives us mental preparation and it allows us not to be overwhelmed by unexpected surprises. It is like practising for a real test. When we practice hard enough the actual test will be easier. In this context, try to live a minimalist life and mimic what you may do during a depression such as eating less, having intermittent fasting, being extremely frugal and perhaps sleeping rough. Another advantage of this mindset is that it makes you appreciate the good thing in life too that you may usually overlook or take for granted.

11. Diversify you assets:

[Disclaimer: I am not a financial adviser. These are just things am consider doing myself. If you want financial advice, please seek professional adviser].

The most important thing during an economic crisis is to ensure you have liquidity in your assets. Have sufficient savings, emergency fund and cash in hand. Having cash in hand is especially useful before inflation hits and in case the bank closes.

However, if you are very rich and do not want to put all your assets in a fiat currency, the consider diversifying your assets into different classes.

a) Precious metal: Precious metal such as gold and silver has been historically used to hedge against fiat currency inflation. It had been used as a currency. Silver in a form of coin is more convenient when buying lesser value goods such as food. However, keep in mind that there is no guarantee that precious metal will not be used as a currency as is best to approach it has storing long term value asset to hedge currency crash or to be used in bribery.

b) Cryptocurrency: A new and risky way to diverse your asset is to have popular cryptocurrency such as Bitcoin. As it is risky and relatively new, people only tend to have a very small percentage of cryptocurrency in their asset portfolio. The advantage of using cryptocurrency is how efficient and easy it is to transfer currency, and it is currently used outside the mainstream retail. As it is relatively new, volatile and high risk, I advise to only buy if can afford to lose it.

c) Land and property: You can use these assets to generate rental money and producing agricultural goods. NB: consider the taxation that is involved in land and property.

d) Allocate your assets abroad: If you are living in a country that is vulnerable to depression due to its weak economic circumstance, then consider moving your assets abroad that is more economically stable. You can do this via buying international property, stocks or currency.

What to do during an economic depression:

1. Keep working:

a) Keep your job:

Try to keep your job despite whether there are pay cut or less working hour. One useful tip to be on the good side of your employer is being self aware, be positive and know how to make things less stressful for your team and boss. Those who lack self awareness and create stress for the team are usually the first to go.

b) Have additional stream of income:

With the high chance of losing your main source of income, always have alternative source of income. Have a side job – skills you learn prior the depression will become useful. Also have a passive side income i.e. renting your spare room.

c) Be willing to relocate:

Consider relocating if there are extreme job shortages in your country or region. Some countries will be less affected due to less underlining economic issues such as problems with national debt, governmental debt or manufacturing power. This is why it is crucial to have a valid passport and sufficient emergency funding for transportation cost and a grace period to find a job. Consider renting your home to airbnb or real estate for additional income.

d) Understand the change of market and quickly pivot and adapt:

With the constantly change of the market world and trend, be sure to recognised what is in demand, and then quickly pivot and adapt yourself to that new direction. This means consider learning a new course, being certified, start from entry level or even volunteer. Those who constantly learn and quickly adapt will survive in mostly any circumstances.

This ability to quickly adaptable also applies to businesses. For businesses to survive, it needs to change there business model or provide different goods and services in order to meet the new demand.

e) Seek governmental help if unemployed:

If you lose your job, don’t be too proud to seek for help financial help from the government. A lot of people are going through the same problem. Don’t put yourself in a vulnerable situation that risk losing your home or depleting your hard earned savings.

2. Be resourceful (not wasteful)- Reduce, Reuse, Recycle & Repair:

One valuable lesson I learnt from a number of Great Depression stories is to be resourceful and not wasteful. This hits home for me, because we are living in a time when earth precious resources material are getting scarce and unsustainable management of resources are leading to devastating pollution and global warming and so we need to be resourceful and sustainable more than ever.

There were a lot of interest ideas we can learn from the Great Depression. Just to state a few: the depression cake does not use unnecessary ingredients such as egg or diary product – a step towards sustainable vegan diet; food were not wasted and left over were made into soup – some say it was the nicest soup they ever had!; they did not waste water – they used bath water to water the plants; they do not replace but they repair – they know how to sew ripped clothes, fixed damaged shoes and they would bring broken equipment to repair shop as it was cheaper.

3. Grow your own vegetables and learn how to preserve food:

As mentioned above, learn to be more self sustainable. Learn and have practical experience prior the depression. This will be useful as you can immediately scale up production once we enter the depression. Also learn how to preserve the fruits and vegetable through technique such as dry freeze, using vacuum, pickle and canning. These will be useful during winter season. Learn how to save the seeds, sell your own food and barter.

However, I would also like to emphasis that growing your own food is only a side gig. It is not realistic to solely depending your livelihood on garden farming, especially if you do not have massive land and many years of experience in agriculture. You do not want to be in a position where your crops goes bad and you have no money to buy food. Be responsible and do not neglect your job that provides purchase power for food and ensure you have adequate supply of food stored at home.

4. Adapt to the traditional barter economy:

In the case that the bank closes or the fiat currency loses value, there will likely be the return of a more traditional barter economy where people exchange goods and services. Learn how to barter. Learn how to grow and sell vegetables as well as traditional essential skills.

5. Strengthen your relationship:

With employment uncertainty, unstable income and the mixed of negative emotions such as fear and anxiety, it will definitely put strain in your relationship with love ones. Arguments, domestic violence, fights and divorce is not uncommon. it is vital to put effort in nurturing and building a positive relationship and knowing how to management arguments. Times like this, it is important to be more kind, understanding, patient, forgiving and positive. Communicate more and build trust. There are plenty of self help resource out there to look at.

6. Increase your security:

As poverty grows, so will crime such as looting, violence, robbery and burglary. Take action to increase your security and protect yourself and your family. Being aware of your environment, walk in groups and avoid walking at night time. Invest in a security camera as well as a solar powered motion light. Get to know your neighbour and organised a neighbourhood watch.

7. Look after your health:

It is very important to not neglect our health. Medical and dental treatment can be expensive and taking preventative measure is always the better choice. Make sure you have a healthy diet (avoid sugary, oily food and excessive salt intake), exercise regularly, avoid harmful substance or alcohol and make sure you have a good dental hygiene (yes, floss your teeth!). Make sure you look after the one and only precious body you have.

8. Take care of your mental well being and stay positive:

In an economic depression, stress and anxiety is be at all time high. Substance abuse and suicide rate significantly increases. During this vulnerable period of time, it’s more important than ever to make sure we look after our mental health and stay positive. Depression doesn’t have to be depressing.

There are many technique and outlook tools you can use to help you cope this difficult period. Most of the time it’s actually our perception and outlook that are the main cause of our grief. For example, there are those who are are living in distress because they fear losing what wealth they have. At the same time there are those who are content and happy despite having hardly anything except for the essential goods. There are also those who take the situation as a test of character and an opportunity to develop themselves. It comes to show how that we may not be able to change our circumstance but we can definitely change our perception.

Having spirituality and a good community to keep us going is useful. Also consider reading a related post called ‘How to mentally cope in a pandemic lockdown‘.

To wrap things up…

Remember, it is not always about wealth. Wealth is a tool you use to get by in life. Don’t forget to appreciate the precious things in life such as our health, love ones whilst they are is still alive and to just breathing in this beautiful planet. Nothing is permanent in this world, and difficult time shall pass, so just appreciate the little good things in life and dance through this not so depressing chapter in your life.