Is it smart to invest during a recession?

Yes—if you use a diversified, long-term approach. Focus on strong cash-flow businesses or broad index funds, keep an emergency fund intact, and avoid leverage you cannot service.

How big should my emergency fund be in a downturn?

Aim for 3–6 months of essential expenses; extend to 6–12 months if your income is volatile or you work in a cyclical industry.

What expenses should I cut first?

Eliminate non-essential subscriptions, luxury dining, and impulse shopping. Keep investments in health and education because they fuel future earning power.

Should I pay off debt or invest?

Prioritize high-interest debt first (e.g., credit cards). For low-rate debt, consider a split strategy: make scheduled payments while investing consistently.

How can I monetize my assets quickly?

Rent spare rooms or vehicles, sell unused items, freelance skills online, or package your team’s expertise into consulting and workshops.

What is a three-phase financial plan?

Phase 1: trim nice-to-have costs. Phase 2: scale to essentials if income falls. Phase 3: execute a pre-decided 'ripcord' plan after job loss to protect cash and momentum.

When should I go on offense again?

When multiple data points turn positive (e.g., steady income, improving market indicators), shift from defense to selective offense—ask for raises, launch projects, and add to quality assets.

What skills are most valuable to learn in a recession?

High-demand, transferable skills such as data analysis, software development, digital marketing, sales, and communication. Pair with domain knowledge in your industry.

Can I start a business during a downturn?

Yes. Downturns lower competition and costs. Validate demand, keep fixed costs lean, and target must-have problems customers still pay to solve.

How do I stay disciplined emotionally?

Control controllables: a written budget, automatic saving/investing, regular workouts, and a news/social media diet. Review your plan on a fixed schedule, not on headlines.

How to Build Wealth During a Recession: 5 Proven Steps for Financial Success

Hard Tech August 16, 2025

Recessions can feel overwhelming. Tariffs rise, markets swing wildly, and the dream of getting rich often seems out of reach. Yet, history shows that downturns don’t only destroy wealth—they also create it.

I’ve personally lived through three major recessions—2000, 2008, and 2020. Despite the chaos, I managed to grow my wealth by making smart, calculated decisions while others froze in fear. The truth is: recessions are windows of opportunity, but only for those prepared to act.

In this guide, I’ll break down five practical steps you can take—whether you’re starting from zero or already building assets—to not just survive a recession, but thrive in it.

Step 1: Run Your Numbers & Control the Controllables

The first rule of thriving in a recession is knowing exactly where your money is going.

Most people avoid facing financial reality until it’s too late. They continue paying for unused subscriptions, splurging on luxury items, or financing vacations they can’t afford. This “death by a thousand memberships” slowly erodes their wealth.

👉 Actionable Tip:

Create a simple spreadsheet (Google Sheets or Excel works fine).
Track every dollar in and out—income, bills, discretionary spending.
Identify unnecessary expenses (unused gym memberships, streaming services, excessive dining out).
Cut what doesn’t serve your long-term growth.

💡 Pro Tip: Don’t cut investments in your health or education. Reading, exercising, or taking an online course can yield exponential returns when the economy recovers.

Case Study: During 2008, I cut non-essential luxuries but kept investing in self-development. Those skills became the foundation for the business opportunities I seized when markets bounced back.

Step 2: Build Your Three-Phase Financial Plan

Recessions bring uncertainty. The best way to face it? Plan for multiple scenarios before they happen.

I call this the Three-Phase Plan:

Phase One – Mild Disruption:
- Bonus or side income dries up.
- Start reducing “nice-to-have” expenses (luxury vacations, gadgets).
Phase Two – Moderate Disruption:
- Salary cuts or reduced business income.
- Scale back to essentials only.
Phase Three – Severe Disruption:
- Job loss or major business collapse.
- Execute the “ripcord” plan—downsize housing, move in with family if needed, or take temporary work to stabilize cash flow.

Real-Life Example:
In 2020, I coached software CEOs whose clients (restaurants, gyms, retail shops) were shutting down overnight. By preparing their phase plans in advance, they avoided panic decisions and positioned themselves for growth once lockdowns lifted.

👉 Key Takeaway: Having a pre-decided plan removes emotion from decision-making, allowing you to act strategically instead of reactively.

Step 3: Monetize Your Assets

When the economy contracts, your survival depends on resourcefulness. Ask yourself:

🔑 “How can I make my time and resources generate income?”

Ways to monetize during a recession:

Real Estate: Rent out spare rooms or list unused properties on Airbnb.
Vehicles: Put an extra car on Turo or drive for Uber/Lyft.
Skills & Knowledge: Offer consulting, create workshops, or freelance online.
Decluttering: Sell unused items through yard sales, OLX, or eBay.

Case Study: I met a mortgage broker who drove Uber during the housing slowdown. That side income not only paid for family trips but also prevented financial strain—without touching his long-term investments.

👉 Business Example: If you run a company with excess staff capacity, package their expertise into consulting or training programs instead of cutting jobs immediately.

Bottom Line: Protect your momentum. Winners aren’t the ones who avoid setbacks but those who refuse to get knocked out of the game.

Step 4: Sharpen Your Axe

The phrase comes from Abraham Lincoln:

“Give me six hours to chop down a tree, and I will spend the first four sharpening the axe.”

Recessions are the perfect time to sharpen your personal and professional skills.

Invest in:

Education: Take online certifications, learn in-demand skills (AI, coding, digital marketing, etc.).
Health: Build resilience with exercise, sleep, and nutrition.
Networking: Strengthen professional relationships that may open doors later.

Analogy: A butterfly struggles to escape its cocoon. If someone helps, it dies, because the struggle is what strengthens its wings. Similarly, your current challenges are forging your ability to soar once the economy rebounds.

👉 Mindset Shift: Don’t just go through the recession. Grow through it.

Step 5: Strike Hard When the Skies Clear

The greatest fortunes are made in downturns—but only by those who are prepared.

History shows that after every crash comes a surge. Warren Buffett famously advises:

“Be fearful when others are greedy, and greedy when others are fearful.”

When indicators turn positive, act fast:

Ask for promotions or raises.
Double down on investments (stocks, real estate, or business ventures).
Launch new projects while competitors are still hesitant.

Real-Life Analogy:
During rally car racing, drivers enter corners cautiously but accelerate aggressively at the apex. Similarly, you must play defense during uncertainty—but once opportunities emerge, go all in.

👉 Timing is critical. Wait too long, and everyone else will have seized the opportunity.

FAQs About Building Wealth in a Recession

Q1: Should I invest during a recession?
Yes—but strategically. Focus on undervalued assets, index funds, or businesses with strong fundamentals. Always diversify to minimize risk.

Q2: Is it smart to start a business in a downturn?
Absolutely. Many billion-dollar companies (e.g., Uber, Airbnb) were born in recessions. Lower costs and reduced competition often create unique openings.

Q3: What if I already lost my job?
Use your skills for freelancing, side hustles, or online businesses. Cut expenses aggressively while focusing on retraining for future demand.

Pros & Cons of Wealth-Building During Recession

✅ Pros:

Opportunity to buy assets at a discount.
Chance to build resilience and discipline.
Strong potential for above-average returns.

❌ Cons:

Income instability.
Emotional stress and uncertainty.
Requires disciplined planning and risk tolerance.

Key Takeaways

Run your numbers: Track income and cut wasteful expenses.
Build a three-phase plan: Be prepared for mild, moderate, or severe disruptions.
Monetize assets: Use your time, skills, and possessions creatively.
Sharpen your axe: Focus on personal growth and resilience.
Strike hard when skies clear: Be ready to act when opportunities arise.

Conclusion

Recessions are not the end of wealth—they are the beginning of it for those who stay disciplined. By controlling the controllables, preparing for multiple outcomes, monetizing resources, and investing in yourself, you can come out of any downturn stronger.

💡 Remember: Winners win, no matter the economy. Be the one who enters the storm like a lamb—calm, prepared—and emerges like a lion, ready to seize every opportunity.