Why Millionaires Love Recessions (And How You Can Too)

This is Busy Getting Better, the podcast for women who are committed to prioritizing their own personal growth. I'm your host, Madison J. A mindset and money coach, a first generation wealth builder and a woman on a mission to help you master your finances and live your best life. Money is not all we are covering though because in order to live your best life, you have to become your best self. So we are diving deep into all things personal development and bringing you the mindset shifts, money, tips and inspiration. You need to go out there, be bold and build the life you can't stop daydreaming about. It's time to get busy babe. Busy getting better. Oh, what is up? Welcome back to the podcast. We are going to talk all things recessions in this episode. And before you immediately tune out because you're like, ew, ick, yuck. I don't want to talk about a recession right now. We are going to make sure that you leave this episode feeling a lot, a lot better than you might feel about a recession as opposed to if you were watching the news. Because here's the thing about the news man. They love to gain your attention. They love to fear monger, they love to make it sound like the world is ending. They make you just feel like this time is different and I don't even know we're going to end up in some post apocalyptic situation or China's going to take over or I don't know, the news page runs rampant. I'm going to be honest, I'm very, very, very selective of how I intake information as it relates to what's going on in the news. I do not watch the news every day, every week, every month. I have a very few pages that I subscribe to on Instagram where I get some article updates. I'll spend some time looking at Yahoo. Finance page or seeing some stuff like that that pops up. But just know that if you're someone who watches the news all the time, their main job is to keep you focused on the negative and keep you continue tuning in so you can understand what other crazy, horrible stuff is going on. So I want to just make recessions a bit more normalized and help you understand how you can capitalize on being in a recessionary period and why rich people, wealthy people love to see a recession coming. Like they get excited, excited about recessions. They plan for them, they are ready for recessions because they know that when recessions hit, they can grow their wealth at an expedited rate. So let's talk about why that is how that happened and answer all of your questions about what the heck is going on in recessions, why they happen, and most importantly, how to prep like a millionaire preps for recessions. Like, what do you actually need to be doing? If you're looking at the fact that we may or may not be heading into a recession, here's something just to know is like nobody actually knows what's going to happen and they don't even actually classify us in recessions until way after the fact. So we, like, we can guess, we can assume, okay, things feel tight, the stock market's down, all of this stuff. But there is, I don't know, just don't stress, don't stress too hard. Let's build the game plan and talk a little bit more about them. I think the first thing to understand is that most people will panic during a recession. And wealthy people go to work, they are prepared, they have a plan well before in advance because they understand something important about the fact that not only are they prepared to capitalize on it, we're going to talk about how and why, but they understand that the market goes in cycles. There are always going to be ups, there are always going to be downs. It's just matter of fact, we are always going to see dips and we are always going to see rises. We're always going to see the market go into bull markets and we're always going to see them go into bear markets. So a bear market is when the stock market is down. A bull market is when it is going up. That's all you really need to know about that, is that it's so common. It happens all the time. Since 1945, the US has experienced 13 recessions and they occur on average about every six years or so. So it just, it's just a part of the nature of how things go. And the thing to understand about, like specifically the stock market when we're thinking about recessions is it's really based on anticipated things. So when there's a lot of uncertainty in the market and in the world, that's when we see a lot of shifts happen with the stock market. Think about the most recent examples of this. When we were in Covid, I mean, hello, what an unprecedented time we were in. Nobody knew what the heck was happening because we have never lived through something like that. Like that was insanity. Also can't believe it's been five years since then. Time flies and time warps and all of the things, but we saw a recession during that period because nobody knew what was going to happen. There was no way to predict how things were going to go. The reason we're seeing so much conversation about potential recessions this year right now is because we have a new president in office and he is shaking things up in the media. He's talking about doing things differently in our economy than we've had them done for a very long time by having these conversations about introducing tariffs. Tariffs are just essentially extra taxes on all of the products that are going to be coming in and out of the United States. So we're trying to capitalize on how, on people paying more for the products that are coming into our world. And he, you know, he being the president has his reasons. And whether you are loving what he's doing or you are hating what he's doing, it doesn't really matter. He's shaking things up right now in the market and putting his foot down and talking about, you know, increasing these tariffs by a crazy amount. And there is some speculation that his strategy is to utilize this as a negotiation tool to get better trade terms with all of these countries. And so, you know, if you know anything about negotiations, right. Think about, okay, I'm going to ask for $5,000, knowing that I'm okay settling on $2,500 or $3,000 or whatever. So he's going balls to the wall on these tariff demands. And again, we have no idea. There's news articles left and right that are going to tell you what his strategy is, but I don't think anyone really knows. But a speculation is that he's trying to strong arm for better trade agreements, which totally makes sense. Meaning that, you know, tariffs probably won't actually go into place or we aren't going to feel the effects that we way that the media is maybe portraying that we are going to feel them. And also, yeah, we just really have no, we have no idea what this is going to happen. Obviously if tariffs were to go in place, things would get more expensive all around. And that's definitely something to think about. But when I think about stuff like this, the recession and how to have a real like wealthy mindset around this perspective is you've got to focus on, on the things that you can control. And unless you are listening to this podcast and you work in the White House and you are part of the current administration, which yo, if you are slay like, let's, let's chat. I don't think I have any listeners or friends that are that high up in politics. Yeah. But if you are, if you know Anyone, let's chat. We could come on and talk a little bit more about this. But all that's to say we don't know what's going to happen and we can't control policy. So it doesn't really do us any service to be stressed or be fearful about this. At least that's really my perspective on it. Like, I'm not going to change whether Donald Trump decides to put all these tariffs in place, but I can watch what is happening and make the best decisions that are within my control that are going to positively benefit me and my goals and my wealth building strategy in order to make sure that I stay on track. So, yeah, all that to say recessions. So, so common. What happens when a recession goes into place or when we're in a recession is usually you can tell because the stock market drops, right? And that's why there's been so much conversation about the recessions right now is because the stock market, we do not know what's going to happen with tariffs. We don't know what's going to happen with the new administration. There's a lot of uncertainty. And so the stock market is very volatile right now. We're seeing crazy drops in the market we saw within the last month. Just in the month of April alone, we saw one of the biggest drops and one of the biggest comebacks like in market history within days of each other. And so usually when people talk about also getting into the stock market, there's like two really different debates of like how to build your strategy. And there is the timing, the market. I'm going to wait for the market to drop and then I'm going to go ahead and get in and I'm going to ride the wave up. The other strategy is what we consider dollar cost averaging, dca, which means you're just constantly contributing money into the market, regardless of what's going on. You're going to hit some highs, you're going to hit some lows, but you're going to be able to have a very consistent average. And when you're thinking about trying to time the market, think about what I just said. We've had the worst day and the best comeback day in history within it was like, I don't know, I don't have it in front of me, but like within 24 or 48 hours of each other, it was crazy, the comeback. And if you miss that, then you're missing it. So the best strategy really is to just focus on dollar cost averaging because nobody knows what's going to happen in the market. Even the people that have spent their entire career in life becoming the smartest mathematical analytical stock analyzer people like they have no fucking idea. And that's why when we talk about investment strategies like dollar cost averaging and investing in low cost index funds and ETFs, it's like that outperforms majority of people that are actually trying to time the market and are trying to pick individual stocks and all of that stuff. So yeah, just realize that it's all normal and just getting in the game is so important because every single time the market goes down, it is followed by an incredible bull run, meaning that the market goes down and then the market goes up, up, up, up, up, up, up. In the times of the of the year or the times of our lifespan of looking at the stock market, where the market is going up is significantly more often than when the market is going down. We are in recessionary periods significantly shorter amount of times than when we are in bull markets and when markets are increasing and stock prices are going up. So just know that even if we're dipping, we're going to go up eventually. Personally, my, I've looked at my retirement accounts at my portfolios and I'm going to really look at them too much right now. Like they definitely are down from where they were, but I know they're going to go back up. And if you are a long term investor and if you are focused on the outcome of retirement and you're not trying to capitalize on the money right now, there's really nothing to stress about. Like genuinely I'm not worried about it. The money's going to bounce back. I'm continuing to invest. I've invested some money when there were like those peak downs just got in at the down because I know that they're going to rise and they're going to come up. So if anything, I'm pumping more money in right now when the market is down than normally to make sure that I capitalize on when it's going to go back up. And again, specifically if we're talking about your retirement investing strategy, like you don't need that money until you retire. So unless you're super close to retiring it, it shouldn't be a stressful situation. It should be again an opportunity to capitalize on getting more money in the market while prices are down. I feel like we also always see people talk about how it's on sale. So I'll just kind of elaborate on this analogy. Like if you are going to go buy, I Have no idea. A favorite, Your favorite pair of shoes. You're getting a new pair of shoes and the shoes are old. Always a $150. There's some bougie shoes. You like them? They're cute, they're stylish, they're comfy, they Last a while. $150 Pair of shoes and you're like, yeah, I want those shoes. Like, I know I'm gonna wear them all the freaking time. And then they go on sale and they drop 20%, 30%, 40% off. Like, are you like, oh, I don't know, something might be wrong with these shoes now? Or are you like, hell yeah, I'm gonna take advantage. Look at all this money I just saved, right? Girl, math. Look at all this money I just saved by buying something on sale. It's the same thing. If you know that you are going to be a long term investor, you're focused on building wealth. You know, you want to have a portfolio for you to be able to live off of and retire off of. You are going to understand what you're investing in and what index funds and ETFs make the most sense for you. Buy them on sale because then when the price goes back up, you have immediately built in equity. Like, you immediately have additional funds because of the appreciation of the market. So it's just an absolute sleep la. And unfortunately, again, the news and the media just make it sound like it's such a terrible time to be in the market. Like, oh, it's down. I don't know if now's the time. Like, no, now is the time, sister. It really, really is now. I know some people might just be like, okay, well, everything's so expensive. I'd love to get invested, but it's, I don't have any extra money right now. And it's like, okay, heard here. You definitely can understand how things could be pricier right now because we have, you know, higher inflation rates and whatever it might be. And so it's important to understand also just how to prepare for a stock market and also how to, yeah, I guess just really how to prepare. So I want to go through some of the steps that if you're like, okay, this sounds great, I understand. You know, get in while it's low, ride the high up. I am, I want to love a recession like millionaires do, but I don't really know where to start. I don't really know how to capitalize on this. And I'm feeling like even if I wanted to start investing like I just don't even know if I can, like, do I even have money to start investing? And so I'm going to walk you through some key steps that I would do if I were you. And also, I do do this. This is what I do. And this is how I'm preparing as well and how I've been able to carve out, you know, just additional funds to get into the market, all the things. So here is what we are going to do. If you were like, I want to capitalize. I don't want to miss this opportunity. Obviously, we just said, right, they happen on average every, what, like six to 10 years, right? We're going through different. I think it's every six years we go through a recession. So if you're like, hey, if we're going to go through one this year, we're not going to go through one for another six years, right? We obviously have no idea. But let's just use some averages here, like, do you want to capitalize on this one or do you want to wait another six years and capitalize on the next recession? Or do you want them to actually be able to fuel your portfolio and make sure that you are getting even closer to your goals? Because here's the thing, if you think about it, right? If the average stock market return, the s and P500, is what we track and what you typically see people talk about. When we talk about average rate of returns in the stock market, it means we're tracking the S&P 500. The S&P 500, traditionally over the last hundred years, has returned an average of about 10% year over year. If you're buying in when the market is already down, like, okay, we're constantly going up, up, up 10%. Obviously, it's not a perfect linear graph, but you get the idea. If you zoom out, it's always going up. It's always going up. If we're up 10% and now all of a sudden it drops down 10%, 20%, and you get in then, and then you can ride the wave back up. You are likely going to have an average return of more than 10% during that time period. Like, you can really expedite it. There was a really interesting stat that I pulled, and it said that from 2007 to 2016, the median net worth of the richest 20% increased by 13, reaching 1.2 million, which, like, I don't know, I'm just always interested in how people's wealth accumulates at faster rates. And it's gotta be, you Know they're taking, they're investing in different things, but also taking advantage of recessionary periods so that they can get in at lower prices and ride the wave on up. So just remember that it's not about the interim. Right? Right. It's not about right now. It's about zooming out on your life and understanding what this can do for you in the long term and how long term investing is the most tried and true stable, strategic wealth building strategy is. Doing this is figuring out how to get in the market and ride the waves up. So let's talk about some things to do to prepare for a recession that you can actually start doing. First up, we've gotta audit your spending. We've gotta know where your money's going. If you don't know where your money is going, there is no time like right now to figure out where your cash is going. How much money do you have coming in from your job, from your businesses, from side hustles, from passive income? Like, get a grasp on how much money you have coming into your world and get a grasp on how much money you have coming out of your world. Where are you spending money? Right? And this, this is just like basic finance, one on one. Like we cannot do anything until we know what our current state is, right? We can't change anything until we know where we're starting. And so figuring out where your money is going and where it's coming in from and what those numbers look like is key. And then what you want to do is start to, if you don't already have a spending plan is figure out what, where you want your money to be going moving forward, right? So a big thing that I always talk about is, you know, the difference between a spending plan and a budget. Budget mentally is just really restriction based. It's about cutting out all of these things. And I, you know, it's like a diet for your money. That's, that's what we say and it feels restrictive and they just frankly don't work, right? But a spending plan is another way to look at being in troll of your finances and allocating your money in a way that supports your own goals and your own values. And so if we're looking at, okay, I have this amount of income that I can allocate, right? I look at where all my fixed expenses are and I look at where all my variable expenses are, right? Your fixed expenses are the things that are the same payment every single month. Things like your car payment, your home payment, your insurance payment, your phone bill and Then can we optimize that? Are there areas where we can lower your insurance plan? Are there, like, are there little tweaks that we can do? And then when we look at your variable spending, this is where you get to really be in control of like, okay, well, actually, what are my goals, what are my values, and how do I want to be spending my money? And you want to make sure that you have a really clear idea of where your money is going. And if you are somebody who's wanting to capitalize on this, what part of your spending plan, how much money are you allocating to savings or to investments so that you can start to figure out, okay, this is how much I'm working with. So you want to get really clear on that. And also just remember that while it's not necessarily like restriction based, our goals and values change all the time. And it's so okay to look at your spending and be like, you know what? Spending in this area used to really light me up. And I think something else is just now a little bit more important to me. Maybe you are, you know, used to always going out to eat or you have a bunch of subscriptions for TV shows, or you, you know, or buying a daily coffee, like, whatever it is that's in like your habitual routine where you're like, oh my gosh, this used to bring me so much joy. Just check in and ask yourself, is this still bringing me joy? Or have I identified a new goal in my life that I would actually get a lot more joy out of spending my money in this way? We always need to be checking in with where our money's going and just making sure that we're not leaking money in ways that are unintentional. And maybe they were, you know, aligned at a point in our life and maybe they just aren't anymore. Like, the amount of times I've gone through my spending and be like, man, I used to love doing X, Y or Z. And you know what? Now I've grown, I've evolved as a person and my priorities have shifted and it actually low key really excites me to see money going into my IRA every single month. Like, we know we, we know we're getting financially responsible when we get turned on by watching our IRA contributions hit every month, right? So just understand that, like, it's okay if things change. It's. You're allowed to change your mind about what you want to spend on. You're allowed to realign your finances with this new life you're building, your new Goals, your new values, your new priorities, all the things. So always just be gut checking where's your money going and do you still feel good about it? And now is a better time than ever to start being like, you know what? I actually do think I'm going to move, you know, x amount of money over to this new priority, this new goal, so I can start or expedite my wealth building journey. So I could talk on and on about this because frankly, we are just never taught how to spend intentionally and it is a game changer when you can actually start to get super clear on what your plan is. After that, what I would do is really look at your cash reserves. Having a future fund is a piece of mind. Having money in the bank. Typically you'll see a lot of people call this emergency funds in traditional personal finance. If you know me, you know, I don't like to use words that call in experiences I don't want to have and I don't want to have emergencies. But I do want to have money there for the future when I need it and when I run into things and things come up. So I am all about building future funds because future funds to me are a peace of mind and they are a nervous system, regulation tool. Let me tell you, when you can see money in the bank and know that you are not paycheck to paycheck, you have a little bit of breathing room. You can make different decisions, take on different risks. If you happen to get impacted by a job layoff or a pay cut or something like that, that is negative. You know, you've already taken care of future you. So you want to make sure that you've got a future fund that could give you enough breathing room where if something did happen and you needed to lean on that money, you're not immediately stressed because, because when you are immediately needing that next dollar, you, you're, you're in fight or flight mode. You're not operating from a place of peace. You are making probably poor decisions. And you're also impacting your mental health, your physical health. Like your cortisol levels are spiked. Like we want to be able to breathe easy. And also when we're looking at starting or expediting your investment, you want to make sure that you've got money to fall back on in case again something happens. The markets are volatile during recession, so you could put money in and the next day you could lose it. You don't not lose it, but it could go down. You never actually lose your money unless you cash it out just so you are aware of that. So it's all fake. When it's in there, you don't realize any of the gains or the losses until you actually pull your money out. So you might put money in, maybe put a thousand bucks in, and then you look and now you're down to $800. Like, don't panic, it's going to go back up. But you don't want to be putting money in there until you have something to fall back on. So you want to make sure you've got some core expenses saved up in your future fund. And then we get to move into more of that, like, you know, investments. So if you're ready to start investing, have a little bit of a security blanket, have some money in that future fund and then you would really want to focus on upskilling yourself, getting educated and building out your investment plan. What do you want to invest in? What do you, how much do you want to investing every month? Do you want to do specific index funds? Do you like, you want to know what your portfolio goal is and understand what it's going to look like for you. Because the best thing to do in a period, the best thing to do, period, but the best thing to do, especially in a volatile market like a recession, is just to have a plan and to stick to it. So when you start to build out what that plan is going to look like, you can just not. You can not let emotions get in the way because that's the number one thing that screws people over when investing is we are emotional creatures. And that's just why you see people panic, sell stuff all the time, where usually if they would have just left the money in, they would have been way better off in the long run. But you want to build a plan and you want to know what your goals are and you want to know every single week or a month or whatever it is what it is. So you can stick to it and you can block out the noise and you can get and stay in the game. So understanding that upskilling just around education and having a solid plan for what that's going to look like is huge. What I would also be focused on in this area is any way that you can increase your income. Major, major, major slide. Increase your income. You want to make sure that you are making yourself a like, reliable and necessary within your organization. Unfortunately, people got impacted all the time by layoffs during recessions. Like that just is what it is. Companies have to cut costs and so what are you doing to make yourself an invaluable player in the game. If you are in a revenue producing role in your job, like get some revenue on the books, have some projects that are coming, have some positive things to talk about, like make sure that you are contributing to the revenue growth of the organization and make sure that your boss knows. Make sure that your boss knows how hard you're working and how much of a team player you are and all the things that you're doing to contribute so that just in case cuts come across their table, they're like, nah, this girl's got to stay. She's a hustler, she's good attitude, she brings a lot to the team. She's got a lot of exciting projects on the table. Like make yourself invaluable and go make the company some money. If you're not in a revenue producing role, then definitely be making core relationships, making sure that your boss knows that you're in, that you are someone that they can rely on, that they are, that you're a team player that you have like all the things like you just whatever you can do to like root yourself in your current role, do that. And then figure out ways that you can start to increase your income. If you're in a position that you could ask for a raise, do that. The worst that they can say is no. And then if you've got a business, if you've got a side hustle, like how can you start to bring some more money in through those avenues? We know that people spend less during recessions. So you want to make sure that you're doing everything you can to, if you have a business, just to make sure that you're capitalizing while you can. Can you increase your rates? Can you come up with a new offer? Like whatever it is, now is your time to really start to bring in additional income. Always remember, like, right, we can cut our expenses only so much, but your income potential is limitless. Especially we love the digital era age that we live in right now. Like there's so much opportunity out there. So figure out ways that you can bring in extra income. That extra income can go towards additional debt payments. It can go to stacking up your future fund faster, or it can go directly into your weekly monthly contributions into your investments. Like, I think that's a really fun way to look at it. Okay, if I'm in a, I don't know, I'm just gonna use a dog walking example. If I'm gonna go walk dogs every single week or every single month and I make an extra $200. That $200 is specifically going into my investments. Like, you wanna make sure that you have a game plan for it. And so capitalize on it, have fun with it. Like, yeah, all the things. And then what I would also really be focused on probably before you start any of this, this is probably the foundation and you want to be doing this work daily. And this is working on your mindset. You've got to work on your mindset. Always say that mindset is foundation to everything. Obviously, I mentioned we're emotional creatures. Our emotions are driven by the thoughts and the beliefs that we have. We need to make sure that you're not operating from a place of fear, but you're operating from a place of excitement and opportunity and strategy and, you know, thinking like the wealthy are and taking advantage of what's in front of you. And if the market drops 10, 20, 30, 40, I mean, like, whatever. If it drops all of this, like, that's an incredible opportunity to get in. And that's how we need to be viewing it. And even if your slice of the pie is $20 a month, like, even if it's something that feels so negligible to you, it's a win. It is a win. And I also. It's like, kind of addicting once you start putting stuff in there. You're like, oh, yeah, I want more. I want more. And so just upgrading your mindset, working on your mindset and understanding that you are in control of your financial future and not to let the media dictate how you feel and to understand that fear is so natural. Fear is there to keep you safe. Your brain is always going to fear things that it thinks are going to put you into a situation that might be life or death. Right? Our brain is there to keep us alive and to survive. But as I always say, it's not there to help you thrive. And being able to tap into an opportunity, like investing in the middle of a recession, is an opportunity that could absolutely help you thrive. And so just recognizing that, and like I said, block out the things, like stop watching news that makes you feel scared and block out all the negative channels that maybe you. You look at on Instagram and start to follow some more that are supportive and uplifting and help you feel like your goals are possible. Like, that's the kind of stuff you really want to be brainwashing yourself with is, no, I can do this, even if I've never invested before. Like, this is the month. Today is the day. This is the year that Things shift and change and I'm going to take advantage of, of all of that. And just I wish I pulled up the famous quote from Warren Buffett, but it's like, you know, he talks about all the time. Warren Buffett is like the king of investing in the stock market. He is like the dude that everybody tries to emulate. He's amassed absolutely an insane amount of wealth by investing in the stock market. And he just talks about running towards the things that people are fearing. I don't actually have the quote off the top of my head and it's definitely a little bit more interesting than that. But that's the gist. It's like when people are fearful, that's what you got to run towards, right? When people are like zigging, you've got a zag. When people are leaving the stock market, you are going to get into it and take advantage of what that looks like for you. And when we're thinking about investing in the stock market, just to give you some options here, right, of how this could look for you, we are talking your 401k. If you are not contributing to that, start there, make sure you're at least getting your company match. And you could also increase contributions across the board there. You could look at your individual retirement account and ira. Your IRA is the account that you would open up for your retirement. It has nothing to do with your employer. And you can contribute funds in there either to a traditional or a Roth IRA Individual retirement account. You could look at some. If you have access to an hsa. This is like the ultimate triple tax threat hack account. An HSA is a health savings account and you would have access to one if you have a high deductible health plan at your employer. So not everybody has access to this. It's different than a flexible spending account. But in hsa, people don't know this, but you can actually invest funds that are in there. So for example, I had about, I don't know, $5,000, we'll say in my HSA account and my provider let me invest everything over, I want to say it was 2000 or 2500 dollars. And so that's just a couple thousand dollars that I was able to move over and invest in the stock market. So that's a way to take advantage. And then outside of that, you're going to be looking at a traditional brokerage account. So all of the ones I Already mentioned, your 401k, your IRA, your HSA have tax benefits and are good for long term investments. Your brokerage account is going to be something that doesn't have a tax benefit, but you can essentially leverage it for more closer goals that you have. So those are the main accounts you would be looking at in regards to taking advantage of the stock market investment. So I hope that this is helping you just shift your mind. If you are feeling fear, if you have been scared based on all the news and how the world is just ending, just understand this is so important. You now have a plan of action that you're going to put into place so that you can make sure you are operating from a strategic perspective and you are operating from a wealthy mindset perspective and you're taking advantage of the opportunity in front of you and you're not letting fear control your decisions. And I hope that this gives you a little bit more peace of mind. If you are feeling better about a potential recession after listening to this, please DM me and let me know if you still have any questions about what your next step needs to be or how you can capitalize, or if you're still feeling like you're like, ah, I hear you, but I don't know about this. DM me on Instagram. Let's chat about it. I want to make sure that everybody has a solid game plan and everybody can capitalize and take advantage. Obviously, as always, like, everyone's situation is so different and that is just the nature of the game with personal finance. Everyone is going to be in such a different spot in their life and a different place where you can take advantage of different opportunities. So if you have questions, pop in my DMs, let's chat so you can make sure that you take advantage of this. And yeah, I hope that you have a fabulous time and I hope everybody gets wealthy as a whole. Get out and I will see you on the next episode. Bye.