The Great Recession
I graduated high school in 2008, the height of the Great Recession. I saw my friends’ parent(s) lose their jobs and homes. Our future felt like it was swept from under us, sometimes it still feels that way. However, this has completely shaped how I deal with finances. Fortunately, I was working already, in a restaurant, but the effects were visible. All of a sudden my coworkers were beginning to be individuals who had lost their high-paying jobs. And now, they had the same position as a high school student. I remember being asked for job applications and whether we were hiring or not.
I heard on the news what was happening but I did not think it would affect me. The effects of the recession on the town I lived in were not as visible as the rest of the country. This may have been due to a variety of factors, including student loans and that it was the medical center for a large portion of the state.
Fast forward to the present day, the class of 2020 probably feels similar to how the class of 2008 felt. However, we do not know what the economic fallout will be because of this and the cause of it is different than it was for me. My classmates and I had the housing bubble to worry about, while the class of 2020 have a pandemic that might have secondary effects on other aspects of their life.
So, what would I recommend to the class of 2020?
- Learn to budget. This is a skill that really has to be taught. I grew up seeing my mom ‘do numbers,’ as she liked to call it. But budgeting really teaches you the value of a dollar. Click here to get a budget template, it will open an excel spreadsheet and you have to ‘enable editing’ to make it usable. Use this as your starter budget and edit away. Please see the disclaimer at the bottom of the page and on the excel sheet.
- Pay yourself first and open a savings account. One of my biggest regrets is that I did not start saving early, I mentioned it before but I would spend my income until it got to $0.
- Begin saving for retirement. I missed out on investing during the recession, essentially one of the biggest sales of my lifetime. I will not make that mistake again and I will continue saving and investing into my brokerage and retirement accounts.
- Learn to cook. It really is a skill. Especially during this tumultuous time where many of our favorite restaurants and hang-outs will shutter their doors forever. Cooking is also very easy on the budget, coffee can cost less than a dollar if made at home, and lunch can be less than 2 dollars. The markup on food and drinks in the restaurant business is astronomical. For instance, at the restaurant I worked at the cups for sweet tea were $1.99 or so. The actual tea cost per cup was about 20 cents. That means the restaurant earned $1.79 per cup.
Other lessons learned during the Great Recession.
- Living in housing that accounts for less than 30% of my after-tax income. Learn more here.
- Learning the difference between wants and needs. For instance, you need a phone, but do you need the newest iPhone. No, you want the newest one. You can do everything you need to do on an iPhone 5, instead of the iPhone 11.
- Not carrying over a balance on a credit card. I still used and currently use credit cards but it is used like cash. I pay it off immediately.
- What you waste today, you will desire later. When I would eat out I always took the rest of my food with me. I even carry an extra container in my bag, just in case.
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