This article originally appeared in Axios Finish Line, our nightly newsletter on life, leadership and wellness. Sign up here.
During a bull market, most of us feel like financial geniuses, Jim writes.
- And most of us feel wiser with our money when we have more of it.
Why it matters: The true test of a good business, or responsible personal budgeting, is what happens when you're smacked with a wobbly — or worse — economy.
🖼️ The big picture: Everyone from Bloomberg economists, who see a 100% chance of a recession, to Jeff Bezos, who tweeted this week that it's time to "batten down the hatches," thinks 2023 will be a very difficult year for the American and global economies.
- Running a company, we constantly calibrate spending and risk based on economic conditions. All of us do this personally, too.
Here are a few lessons learned from past turmoil:
- Don't let a crisis go to waste. Rahm Emanuel coined that concept during the financial crisis of 2008, just after President Obama's election. The idea is to exploit the unfortunate moment to clean up spending, or focus yourself on tough decisions that might be harder in boom times.
- Get the big things right. Tighter times focus the mind on what matters most and what will provide real value in the future. There's no better exercise than asking yourself this question, in good times and bad.
- Don't overreact. When COVID struck, we feared we'd be needing layoffs. So we initially sought and then scrapped plans to tap the Paycheck Protection Program in 2020. Truth is, I should have trusted our creativity and resilience. We ended up sharpening our focus and beating our goal that year.
- Buckle up before you crash. You don't need to overreact unless you wait too long. If there are small things to do while economic forecasters sort through the storm's severity, do them.
The bottom line: In business and personal finances, you'll find everything you do to brace for harder times was what you probably should've been doing all along.
- Focus + wise decisions = profitable outcomes.
