The year 2022 officially brought recession, but don’t worry, Smart Women Smart Money has your back. Check out our Q&A with the brilliant Jo Ann Skousen, mother of five, former publisher of “Jo Ann Skousen’s Money Letter For Women,” author of several investing books, and associate editor of “Forecasts & Strategies” investing newsletter.  

By Carrie Sheffield

Here are five things to consider in a recession, per Skousen, in a lightly-edited interview: 

  • First, prepare yourself. You need to get started when there are times of plenty so that you’re ready when you don’t have a lot of money. And that means that when you begin earning a living, you need to start right out by saving money. You should save no less than 10%. Always save 10%. It’s easy to figure; you just drop the zero. That’s how much you save. It doesn’t put so much pressure on you that you’re not going to be able to do it. And it’s amazing how quickly that much money starts to add up…. Don’t wait until you see what’s leftover. Always save. You should have a long-term savings program and short-term savings. Long-term is just what it says: long-term is for when times get bad, and you just don’t touch it. Short term is for emergencies. Your car breaks down, you get a flat tire, so you don’t have to use your credit card.”  
  • “Be really careful with debt. Don’t rob your future with past purchases. You need to always be thinking about what you want to do in the future and not what you want to do right now. So if you do use credit cards, always pay them off every time. Don’t ever have a carrying charge. Don’t ever pay interest. You save 10% first, and the next thing you pay your credit card, and then if you need discretionary income, that’s what you do for what’s leftover. But always be very careful with that. … My husband and I worked for ourselves. And our income fluctuates wildly. I mean by tens of thousands, if not more, a year that we might make–more or less. So we’ve never said, ‘Oh, here’s how much money we have. That means that’s how much money we spend.’ It’s always been. ‘Well, good. This is how much money we’re earning. We don’t need to spend more than we always do.'”  
  • “Be very careful with savings and then invest it wisely. You need to be thinking about your investment temperament. Am I a risk taker? A speculator? Am I really careful with my money? Am I more worried about losing money than I am about making a lot of return? And that’s okay. Because either way, you’re going to do well, as long as you’re always saving and investing wisely …it’s really good to have some investment advisors. Read a variety of newsletters so that you can get a variety of ideas. Find the ones that fit your temperament, and then follow their advice, but make your own decisions. There’s some good companies out there where you can do your own trading. Charles Schwab is a really good one because they don’t have high minimums, and you can just go in and adjust your portfolio yourself. You don’t have to call a stockbroker and say, I’m thinking of buying this, and he’s saying, ‘Well, I don’t know if you should.’ You just make your own decisions.” 
  • Read “The Richest Man in Babylon” by George S. Clason, which Skousen says she’s relied on often during her 50-year career. “He was an insurance agent who wrote this book to share with his clients. And it’s a great philosophy. It’s written kind of like a fable. Each chapter focuses on a different area of money management. Beginning with ‘A part of all you earn is yours to keep.’ In other words, you need to say for yourself, ‘We give all of our money away; we give it to the butcher, the baker, the shoemaker, the mortgage company, the entertainment, every place except ourselves.’ But you really need to have a mindset that ‘This is my money, and I need to keep some of it.’ So you just put your savings first.” 
  • “Be willing to make drastic changes. You get a roommate; maybe stay away from car leases because it’s like being in debt because you can’t get out of them. You can’t sell out of them, and you’re stuck. Sell an expensive car, get a clunker, knowing that when things get better, you can always go back and get something better … right now is the strangest recession because it’s an inflation-caused recession rather than an employment-caused recession. The jobs are there. Everybody’s hiring. And so looking for another job, a second job, a third job isn’t pleasant, but it’s not permanent. These are survival times, and you just take survival measures during those times.”  

Carrie Sheffield is a senior policy analyst at Independent Women’s Voice and a fellow at State Financial Officers Foundation.