Warren Buffett and 6 Other Money Experts on the Most Important Things To Do During a Recession
Written by
Cynthia Measom
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Rikki Elliot
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Recessions can stir fear, but they also present opportunities, and it’s important to navigate these economic downturns with wisdom. While many people might feel the urge to buckle down and weather the storm, some financial experts, like Warren Buffett, have insights on turning these challenging times into periods of growth and advantage. They recognize that downturns can reshape markets, create new pathways and offer value where others might not see it. Other money experts recommend focusing on tried-and-true money-management principles to stay afloat financially.
Warren Buffett
Known as the “Oracle of Omaha,” Buffett’s investment prowess has led him to be one of the richest men in the world. One of his most iconic pieces of advice is: “Be fearful when others are greedy, and be greedy when others are fearful.” For example in a recession, while many panic and sell off their stocks, Buffett sees this as a chance to invest in undervalued assets. Then when the economy eventually recovers, these investments could offer significant returns.
Robert Kiyosaki
Kiyosaki shares Buffett’s opinion when it comes to going against the grain during a recession. In his bestselling book “Rich Dad Poor Dad,” Kiyosaki wrote, “It often takes great courage to not let rumors and talk of doom and gloom affect your doubts and fears. But a savvy investor knows that the seemingly worst of times is actually the best of times to make money. When everyone else is too afraid to act, they pull the trigger and are rewarded.”
J.D. Roth
J.D. Roth, founder of the popular personal finance blog “Get Rich Slowly,” offered this advice about preparing for economic downturns on his blog, “Nobody can know for sure when the next economic winter will arrive, but one thing is for sure: Winter is coming. And you want to be ready when it arrives.”
To prepare for a recession, Roth recommends getting out of debt by using the snowball method, bolstering your emergency fund, balancing your budget, doubling down at work and ensuring your asset allocation matches your risk tolerance — especially if you’re heavily invested in the stock market.
Mark Cuban
Billionaire entrepreneur and “Shark Tank” star Mark Cuban recommends understanding what might happen in a recession to your employer and what that will mean for your job. By recognizing the risks, Cuban said you’ll be primed to make a job-related move instead of being blindsided with a layoff during an economic downturn.
Barbara Corcoran
Another Shark and money expert, Barbara Corcoran believes that taking advantage of financial resources is important when the economy is on a downhill slide. She said you should prioritize paying for essentials and wiping out unnecessary expenses. She also recommended paying down any credit card debt you have by starting with the accounts with the highest interest rates.
Suze Orman
Personal finance guru Suze Orman recommends living below your means, which is something she thinks you should do at all times, not just during a recession. On her blog, she wrote that living below your means and within your needs results in two payoffs. “For starters, your living costs will go down,” Orman wrote. “If you were laid off, that means your emergency savings will last longer. And when you reduce your spending today, that will give you more money to put toward building recession protection. A dollar not spent is another dollar you can add to your emergency savings or use to reduce your credit card debt.”
Dave Ramsey
Radio host and financial counselor Dave Ramsey has faith in the economy to bounce back after a recession. In the face of a recession, Ramsey advocates continuing to invest in the stock market and not panic. He wrote on his blog that although you might think pulling your investments during a recession is the right move, it’s not. He said if you keep investing during a recession, you’re in a position to reap the benefits once the economy rights itself.
Financial Preparation Is Key During a Recession
Navigating a recession can be challenging, but with the right strategies, it’s manageable. By following the advice of these financial experts, you can position yourself to not only survive but possibly even thrive during times of financial strife. Actions like investing wisely, keeping a cool head, reducing debt and building a safety net are all necessary to prepare for and successfully weather a recession.
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