It’s been a turbulent year in many different markets and sectors and now we’re either in or on the verge of a recession depending on who you ask. But no matter what the official verdict is, all Americans are feeling the effects of the economy with everything they do.

On this episode, we’re going to answer a question that came in about how to manage your money during a recession. It’s something that we’re talking about with clients and it’s an important discussion to be having with your advisor.

Historically, people would be asking whether they should be putting all their money in gold or real estate. Like we always talk about, balance should be your priority. You don’t want to rush to move all your money into safety. Instead, your approach needs to be proper diversification regardless of what the market is doing. The key is to know how much you’ll need now versus how much you’ll need later and then we can start building a plan.

It’s also important to remember that there’s not just one playbook for how to navigate a recession. We all our financial needs will be to have enough to pay ourselves every month, something that can cover emergencies, and money that can cover us if we live another 50 years. Depending on what you need for each of those will determine what steps you need to take.

Another question we got today is one that all new parents have to deal with: paying for childcare. In this case, the grandparents want to help out with a set of twins to help save them more than $2,000/month in childcare but it would require one spouse to retire a year earlier. If that happens, can you offset that by having the other spouse work a year longer?

The answer is that it could be that simple, but you want to make sure it doesn’t impact your ability to remain independent in retirement. You don’t want to sacrifice a year or two of work now to help with grandchildren and then need to move in with your children later on. Planning can make this work if spending more time with your family is what you want to do in retirement, but let’s make sure all the numbers add up first.

The final question we address today comes in from someone that wants to know if they should change their investments to match what her brother is doing because he knows more about finances. The simple answer here is no. It doesn’t matter what anyone else is doing because your needs could be entirely different than yours. Factor in your risk tolerance and your time horizons and your investment strategy might need to be completely different. The only way to find this out is to do proper planning.

As always, we offer up the opportunity to get your Money Map review to answer these and any other questions you have about the future and retirement.

0:19 – Mailbag question on preparing for a recession

4:42 – Mailbag question about childcare expenses

7:59 – Mailbag question on investing options