Who Gets Wiped Out First in a Recession

now everybody knows that recessions are brutal right but they're also predictable when the economy tanks it's always the same types of people making the same types of mistakes that go broke so today we're breaking down who gets wiped out in a recession From First to Last by the end of this video you'll know exactly how to become Recession Proof welcome to alux the place for future billionaires come to get inspired all right so let's start off with the first and most obvious group to get wiped out here overspenders these are the people who always upgrade

their lifestyle the moment they get a raise and sometimes they even go beyond that spending money they don't really have take for example a software engineer who's been job hopping and getting raises at every new company they join with every pay bump they get new clothes a fancier apartment that car they've been eyeing up it's always something and why not right life is good it's getting better and they figure well I can afford it and even if something happens I can just cut back but then a recession hits the economy tanks layoffs sweep through their

industry and suddenly all of their little luxuries become serious liabilities what overspenders don't realize is they can't just cut back like that rent is still due gas for that expensive car does it magically get cheaper and those car payments yeah they're non-negotiable when income dries up what's left is the same expensive monthly bills piling up with no paycheck to cover them here's the thing okay overspenders think they're living their best life because they deserve to enjoy the money they've earned and yes you do deserve to enjoy your hard work but not at the expense of

your financial future luxuries have a sneaky way of turning into burdens cars homes vacations even those streaming subscriptions when things go south they can drown you in expenses faster than you think now if this hits a little too close to home for you don't panic okay the solution is as simple as following the golden rule of personal finance just spend less than you earn we're not telling you to cancel Netflix and start clipping coupons okay just don't let your lifestyle drain your wallet completely all right so moving along the next group to get wiped out

by a recession are emotional decision makers when some people hear the word recession it's like a gun went off their fight ORF flight Instinct kicks into high gear they feel cornered and they start making financial decisions In the Heat of the Moment which is never a good idea now this can play out in a lot of ways maybe it's an entry-level employee who hears rumors of layoffs they start spreading gossip about their co-workers and try to secure a promotion but they end up getting fired maybe it's an investor who watches the stock market plummet they

Panic sell all of their positions and a massive loss and decide to hoard the cash under their mattress or maybe it's a middleclass dad who decides to pour the kids college fund into a struggling company he thinks is destined for a comeback but instead goes bankrupt the Common Thread here is that these people are acting out of emotion they feel like they have to do something so doing anything makes them feel better like they're in control they tell themselves I'm being proactive I'm protecting myself but the problem is that these decisions are based on fear

or excitement or even guilt sometimes feeling that is totally normal especially during uncertain times but come on emotions are terrible financial advisors recessions are tough okay but they are temporary on average they last around 10 months so the key to avoiding this mistake is to just slow down before you sell anything you own or bet the farm on a risky investment take a step back and ask yourself if this move aligns with your long-term goals you'll find that you won't just survive the storm no you'll come out stronger on the other side next up we

got to talk about those Risk Takers because you know there is no reward without risk that's just life but when that risk is the collapse of the entire economy oh you know we're just in a little bit of trouble Risk Takers are people who chase huge returns by putting their money into speculative assets this has the potential to make you incredibly rich but most people make the same mistake and when the recession comes it's a very costly one picture a young accountant who's setting aside some of their income to invest in crypto every month that's

a good strategy but the thing is they're putting every penny of their savings on the same coin because one day it's going to go to the Moon I mean yeah sure but the ride up isn't a straight line at first everything seems great the coin's value is skyrocketing it's up 10x from where they bought it but this is just the start Diamond hands baby and then that market crashes suddenly the coin loses 99% of its value and our friend has no savings left to weather the recession with Risk Takers they know they're playing with fire

and sure the Flames are exciting until you get burned during recession stuff like crypto and promising new startups are usually the first in line at the chopping block leaving Risk Takers with nothing to fall back on but it doesn't have to be that way okay if you're the kind of person who loves a good Hail Mary the good news is that bold risks have their place okay but they should never be your whole financial strategy as long as you spread your money across some iron Clan Investments and have some emergency cash at hand well you

should be able to survive a recession no problem and still have some money left to bet on the next big thing but you know one of the most vulnerable groups in a recession is anyone who's been Reckless with debt you see debt can feel like a shortcut to Building Wealth you can use it to fund your lifestyle make big purchases and even invest but when a recession comes and that cash stops flowing things can quickly spiral out of control just look back at the 2008 financial crisis where millions of American homeowners were caught in a

perfect storm of bad debt Banks were handing out money like it was candy and people were buying homes they could not afford assuming interest rates would stay low and housing prices would keep Rising forever and for a while they did people were living the American dream thinking they'd made a Smart Financial move but then reality hit interest rates went up and suddenly people's monthly payments doubled or even tripled and to make matters worse housing prices crashed so even selling the home you had wasn't enough to pay back your loan many families lost everything they were

buried in debt their credit was destroyed and their financial Futures were derailed for years what many people learned from that financial crisis is that debt doesn't care if you've had a rough month or if the econom economy is in a recession if you're not in debt yet the best advice is to avoid it as much as possible if you are in debt make paying off the highin loans your first priority and don't take on any more unless it is absolutely necessary but if you do have to borrow whether it's to fund a business or to

buy a home limit your debt to whatever you can handle even when life gets tough not just when it's good debt can actually be a powerful tool but only if you know how to manage it wisely now the next group that struggles during a recession are people whose skills are so narrowly focused on one role or one industry that when the economy shifts they're left stranded it's not that they're not talented they might even be experts but their expertise is tied to something that only has demand in certain situations imagine a programmer specializing in a

niche coding language for gaming companies in the good times they're working on groundbreaking stuff but when a recession hits companies in the gaming industry start cutting costs and shift their focus to safer projects instead suddenly that programmer is out of a job and their Niche skills don't translate easily to other Industries traditional education systems often push us to specialize in one field the idea is that if you master a unique skill set you'll have no competition but the problem is there won't always be a demand for every specific set of skills and that's why it's

so important to be adaptable and to know how to do a little bit of everything now this quote by Robert a heinan who is a science fiction author naval officer and aeronautical engineer he sums it up quite well a human being should be able to change a diaper plan an invasion butcher a hog con a ship design a building write a Sonet balance accounts build bu a wall set a bone Comfort the dying take orders give orders cooperate act alone solve equations analyze new problems pitch manure program a computer cook a tasty meal fight efficiently

and die gallantly specialization is for insects so if you're someone who's specialized in a single skill or Niche well it is time to expand your horizon my friend the one thing we've learned so far is that adaptability is truly the ultimate safety net recessions career changes and shifts in the economy don't wait for anyone and being stuck in a narrow skill set can leave you incredibly vulnerable that's why learning how to learn is the single most valuable skill that you can have think about it Industries evolve Technologies change and opportunities come and go but if

you know how to pick up new skills quickly and effectively you're never out of options you can pivot adapt and thrive in any situation and that's exactly why we've created The alux Learning Mastery course now this one isn't just about learning one particular new skill it's about mastering the process of learning itself whether you're tackling a new language developing technical skills or even exploring completely new Industries this course gives you the tools to absorb information faster retain it longer and apply it effectively in your life because here's the truth okay being a jack of all

trades doesn't mean you're average it means you're ready for anything life throws at you so if you want to stay ahead of the curve and build a skill set that can weather any storm check out our learning Mastery course the link is in the description because the best thing you can be in life is a jack of all trades and a master of some all right so let's get back to our list now we're on to some people who will still be affected by a recession but might last a little bit longer there's a lot

you can learn from them okay so first of all there are the underprepared Savers these guys are on a good track they're saving money which puts them ahead of those who live paycheck to paycheck but they're still not fully ready for what the recession can throw at them take a young sales rep in the US who's living within their means staying out of debt and has managed to save around $112,000 in a basic savings account in this economy $122,000 in savings almost gives them the right to brag today the average American 20-some year- old has

about $113,000 of debt and only around 5,500 in savings so yeah our sales rep is feeling pretty confident they think I've got some money saved I'll be fine no matter what but even though that's definitely a great start it is not the full picture a recession might not wipe out an underprepared saver right away but if they don't take these steps they're still in Risk think about it when a recession hits and they lose their job groceries rent and car payments and other living expenses pile up faster than they expect within around 3 months time

that safety net they worked so hard to build is completely gone like we said before recessions tend to last around 10 months on average that means they're stuck with no income and no savings for the majority of this downturn the lesson here is that when you think you've saved enough save some more to really Recession Proof yourself you need two things an emergency fund and the strategy to grow your savings first aim for 8 to 12 months of living expenses in a safe account that you can access quickly if things get tough that's your safety

net and second make your money work for you by investing in relatively safe and diversified assets that outpace inflation that's the key to building a solid Financial Foundation but you know wealth isn't only measured in paper in fact assets are how most fortunes are built but if a recession comes and you find yourself sitting on a bunch of assets but no cash well it could still wipe you out the next folks we're talking about are the asset rich but the cash poor these people are wealthy in assets like Properties or equipment but they don't actually

have much cold hard cash on hand on paper they look financially secure sure they might even feel Untouchable but a recession can put them in serious trouble imagine you're the owner of a toy making company and you invest all of your cash to buy brand new machines that's called betting on yourself and usually it's a smart move in the good times kids are buying toys and those machines are paying for themselves and then some but when sales drop during a recession you still have to pay all of your employees and keep the lights on but

remember you used all of your cash to buy those machines and now you have to sell them to stay afloat of course those machines are definitely valuable but it's Industrial Equipment you can't sell them from one day to the next it takes a lot of time to find a buyer who's willing to pay a good price for them especially during a recession so suddenly your whole business starts to fall apart people who own a bunch of assets like this often think their financial future is 100% secure normally they're not wrong assets like property and Equipment

are valuable but during a recession value alone loan isn't enough when times are tough liquidity is king So no matter how much you're invested in assets always keep a portion of your wealth in cash and if you're reinvesting in your business it's never a bad idea to have a reliable flow of cash and that's the takeaway here okay being Recession Proof isn't just about being Wealthy on paper it's about being ready for any situation and that brings us to our final group the survivors now these are the people who've done the work to set themselves

up for Success no matter what the economy throws their way they're not Invincible of course but they've built the kind of financial resilience that lets them adapt and Thrive even in the worst of times think of dual income households were both Partners save aggressively invest in solid assets and keep an emergency cash fund with a Year's worth of living expenses when a recession hits they have no debt they only have to work worry about covering their usual living expenses and on top of that they've Diversified their income streams because if one partner loses their job

the other one can hold down the fort while they find another one so instead of scrambling to pay bills they're calmly assessing their situation and even looking for opportunities maybe they put a small percentage of their stock portfolio into an undervalued company or invest in a rental property these are solid financial habits saving consistently avoiding unnecessary debt and investing responsibly recession survivors know that making it through a tough time in wealth is not about how much you have but how well you manage what you do have they build systems that work in good and bad

times the truth is that recessions don't wipe everyone out they wipe out the unprepared and actually reward those who are ready during recessions survivors are just surviving it doesn't sound like much but once the storm passes they're in a position that most people would envy they're safe now alexer if you're ready to start seriously leveling up your life come and join us on the Alo app we've got all the tools you need to crush your goals in 2025 if you download the app and scan the QR code on screen right now you'll get our biggest

discount ever 50% off the yearly membership but this sale ends when February begins so if you want to make sure 2025 is the year that you finally make it happen for yourself well you know what to do my friend scan that QR code and get started by this time next year everyone will be asking how you got so far so fast I'll be right there with you guiding you on the app every single day see you on the inside