Last week held the scariest day on Wall Street in years. Stocks went into free fall, and the Dow plunged almost 1,600 points — easily the biggest point decline in history during a trading day.
Buyers charged back in and limited the damage, but at the closing bell the Dow was still down 1,175 points, by far its worst closing point decline on record.
Since President Donald Trump took office, the United States financial markets have been strong.
Many are confident the economy will continue this upward trajectory. But what if it doesn’t? The fact is, everything could change overnight due to outside factors such as the North Korea threat, race riots, a crumbling infrastructure and an increasingly vulnerable electrical grid.
Today’s economic climate is strangely reminiscent of another time in history, serving as a reminder that nothing lasts forever. At the end of the 1920s, the U.S. was happily enjoying the most robust economy in the world.
Due to World War I destruction, Europeans struggled while Americans thrived. Then nearly overnight, everything fell apart.
The stock market crash of 1929 plunged us into the longest, deepest economic crisis in history. Kicking off what is still known as The Great Depression, a global economic depression lasting an entire decade negatively affected nearly everyone in its wake.
Personal income, tax revenue, profits and prices dropped, while international trade plunged by more than 50 percent. Unemployment in the U.S. rose to a shocking 25 percent, and in some countries as high as 33 percent. Cities worldwide were hit hard, especially those dependent on heavy industry.
Construction was virtually halted and farm communities suffered a great loss as crop prices fell roughly 60 percent. Eventually, in 1939, the economy started to recover, thus proving that a comeback is always possible. But until it materializes, survival is grim.
So, what can we do to prepare for the next depression? Here are some key lessons from The Great Depression that we can use to start preparing immediately.
Grow and store food
The ability to grow and store your own food is key to surviving during any emergency. During depression times, it was rare not to have a garden and food storage.
In today’s world of convenience, this isn’t as common. Many people only plan meals the day of, with multiple stops to grocery stores just hours prior. Would you survive if you didn’t have the convenience of a fully-stocked grocery store?
Become more self-reliant
If you’re reading this, you’re likely well on your way to a life of self-reliance. Take a moment and write down some additional goals in this area and map out how to accomplish them. For example, are you able to survive without power or do you need to purchase a generator?
Use cash, not credit
Avoid debt at all costs. It’s understandable that most people can’t buy homes with cash, but you should do everything in your power to eliminate current debt and avoid accumulating any new debt.
Prioritize the debt you have to pay it off faster, and always make sure you have savings. Stop using credit to make purchases, and start using monthly, weekly and daily budgets.
Learn to go without if you need to. In today’s culture, frugality is seen as a negative trait, where in depression times it was considered positive. Frugality takes planning, critical thinking and lots of creativity, all of which are important life skills to possess. Remember, it’s not about being cheap; it’s about using what you have.
Learn how to enjoy the simple, small pleasures in life. Spend family time together without spending money on entertainment. Families during depression times still enjoyed themselves in spite of difficult times.
Use your imagination and ingenuity to entertain your family without modern conveniences. You can hike or play sports or board games together. Not only will you learn to entertain your family without spending money, you’ll also see that you can stay fit without a pricey gym membership.
Nurture community relationships
These are the people you’ll be closest to in trying times. You likely won’t be able to count on the government for help, so find people you can count on.
Become a deal-watcher
It’s not reasonable to skip spending money altogether, but are you ensuring you’re getting the biggest bang for your buck? Are you clipping coupons to grocery shop? What about tracking double-sale day at the grocery store? When you opt to spend money, spend wisely.
For unknown trying times ahead, the ability to be resilient will be critical. Depending on how your particular city would fair during a depression/recession, you may need to move, change jobs, etc. There are many cases in which being a more resilient person will prepare you for the worst.
Do it yourself
Know how to do as much as possible yourself. When money is short, you won’t have a choice. You either do things yourself or go without. Learn how to fix and maintain your home. Learn how to service your car with oil changes, tire rotation, etc. Nearly all household cleaning supplies and detergents can be made at home. Learn how to sew your own clothes and wash them by hand.
Eat real food
Find ways to incorporate more fruits, vegetables and whole grains into your diet. Less packaged and processed foods will save you money immediately, and will also save healthcare costs in the long run.
Learn natural remedies
Visiting a doctor each time you have signs of an illness is costly and unnecessary. Modern medicine, while important, isn’t needed to treat simple illness such as common colds. Learn how to treat illness at home with herbs and natural antibiotics. In times of trouble, you won’t have the resources to visit a healthcare professional for every ache and pain.
Learn to live off the power grid
Relying on government to provide power is something we take for granted. Our grid system is growing increasingly vulnerable and it’s only a matter of time before it collapses entirely.
Be prepared and know how to live without electricity. During the depression era, very few rural homes had electricity, and they managed to survive.
We all hope and pray that America will never experience another Great Depression. But it could be looming out there. As with pretty much everything else in life, it’s best to be prepared.