12 money lessons from the Great Depression that are relevant in the COVID era

12 hours of money from the Great Depression that are relevant in the COVID era
Dozens of millions of people have applied for unemployment since the coronavirus hit American shores. This led financial experts to draw comparisons between the “Great Lockdown” and the worst economic disaster in modern history: the Great Depression.
Beginning with a stock market crash in October 1929, the Great Depression dragged on for almost a decade and changed the lives of Americans in almost all walks of life.
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Nearly a quarter of the US population was unemployed, and even key workers such as doctors saw their wages fall as much as 40%. Some people came in on just pennies a day.
Although the Great Depression happened almost a century ago, much of the lessons learned in the dirty 30s can be applied to the current financial crisis. Click here to see some of the top tips.
1. Save for emergencies
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Shortly after the 1920s, a period of widespread prosperity after World War I, the Great Depression sent a shock wave through the country that most Americans were completely unprepared for.
People who did not have enough savings were broke, unemployed and in debt.
One of the most important lessons to be learned from depression is that anything can happen, and it is always a good idea to plan ahead.
As the unemployment rate continues to rise, you may fear that you have missed your chance. However, it is not too late to set up an emergency fund. The sooner you start depositing money into a high-yield savings account, the more you have available when you need it most.
2. Do it yourself
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During the Great Depression, DIY became the guiding principle. If you wanted something but couldn't afford to buy it, the next best option was to make it yourself.
People made everything from clothes to cleaning supplies at home. They even whipped toys like corn husk dolls to keep the children occupied.
If you want to save a bit of money during the pandemic or just don't want to go to the store, there are tons of free tutorials online that will show you how to make all kinds of useful household products. However, do not try to make your own disinfectant.
3. Take steps to avoid debt
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One of the reasons poverty was so widespread during the Great Depression was that by the 1920s, many Americans took out installment loans and lines of credit with retailers.
When the stock market crashed and the layoffs began, these borrowers faced a mountain of debt and were unable to repay it.
Debt is still a huge problem these days. People were eager to postpone their credit card payments during the pandemic, but unless their interest rates are also put on hold, they're just digging deeper.
To avoid repeating the mistakes of the Great Depression, do your best to pay off your debt as soon as possible. You may want to use a debt consolidation loan to save interest, lower your monthly payments, and get out of debt faster.
4. Eat at home
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For the majority of Americans in the 1930s, eating out - excuse the pun - was off the table. Virtually every meal was cooked from scratch at home, and the day's recipes were creative to say the least.
Classic dishes from the Depression era included vinegar cakes, dandelion salad, and something called Hoover Stew, which had macaroni, hot dogs, and anything else that was lying around and seemed a little edible.
Even though you may not be so desperate, preparing your meals at home and actually consuming the food you have in your pantry remains a sensible way to save money - especially since a photo can get you money back theirs Receipt.
5. Don't be afraid to move
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If the economic fallout from the Great Depression wasn't bad enough, agriculture in the Southern Plains state was paralyzed by a series of droughts and dust storms in the 1930s.
As a result, the area known as the Dust Bowl saw the largest migration in US history. More than 2 million residents pulled stakes up and moved to where they could find work.
With unemployment close to 15% today, many Americans have begun expanding their job searches and considering moving.
Fortunately, finding employment in a new location no longer means hopping a freight train and riding the rails from town to town. The best online job boards use artificial intelligence to track down relevant jobs from across the country. Then you can apply for multiple positions with just a few clicks.
6. Protect your family with life insurance
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Being a parent can be stressful at best, but the Great Depression was a new low. Not only has it been difficult to provide enough food and shelter, but if something happens to you, your children can be left out in the cold without a dollar in their name.
One of the bailouts for families during the Depression was life insurance, which provided liquidity at a time when even the banks could not. Present value guidelines helped many families stay afloat and avoid financial ruin.
To this day, getting life insurance has been vital to ensure your family is protected after your absence. With convenient online services, finding a policy that suits your family's needs is easier than booking a hotel.
7. Live within your means
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Many Americans saw the economic growth of the 1920s as an excuse to live outside of their means.
People were buying items with large tickets that they couldn't really afford in the installment - meaning they would make a small down payment upfront and then make monthly payments with future interest. It was like getting a mortgage on everything.
Needless to say, this wasn't a smart move.
In order to keep your head afloat during the pandemic, you need to avoid the same mistake. Keep a budget of your monthly expenses and try your best to make only the purchases you need for now - with the money you have.
When shopping online, this is the free browser add-on that you should use. It saves you money on every purchase and compares stores to make sure you are getting the best price available.
8. Refinance your mortgage
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When the Great Depression hit, homeowners were suddenly unable to make their mortgage payments.
To prevent foreclosures, President Franklin D. Roosevelt signed the 1933 Homeowner Refinancing Act, which allowed Americans to change the terms of their loans so they could keep their homes.
Refinancing is still a valuable tool for lowering the cost of your mortgage. It could help you save thousands of dollars a year on your monthly payments.
Currently, mortgage rates are lower than ever. Regardless of how the pandemic has affected your finances, you should consider refinancing.
It's easy to compare interest rates online. Even if your current mortgage is only a year old, you may still be able to save a bundle.
9. Odd jobs are better than no job
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In the course of the Great Depression, people took up their jobs wherever they could get it. This includes individual tasks such as chopping wood or shoveling snow, which are paid for after completion.
Nowadays, one-off jobs are usually known as side appearances and are no longer limited to manual labor. Slick online marketplaces are a great example - they can advertise all kinds of services from editing texts to art to voice-over work.
You can also make quick money by signing up for a rewards program that asks you to complete simple tasks like watching videos and filling out surveys. It may not earn you as much as a full-time job, but just like the 1930s, every little bit helps.
10. Replacement changes add up
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One of the most famous songs of the Depression was "Brother, can you save a dime?" - And for a good reason. Back then, a cent or two could mean the difference between eating or being hungry on a given day.
And while a dime doesn't have the same clout as it did in the dirty 30s, saving enough of it can still make a difference.
Most of us have coins and bills that collect dust in drawers and coat pockets. If you are stuck at home during the pandemic, you might as well see how much you can find.
However, if you really want to see the power of the replacement switch in action, use a microinvestment app. You round up your daily purchases to the nearest dollar and invest the difference. You will be surprised how quickly those pennies turn into dollars.
11. If you are ready to retire, start saving now
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For most people during the Great Depression, there was no retirement. More than 63% of men between the ages of 65 and 74 were still employed in 1930.
When the market collapsed, people were left with no savings to fall back on. The only way to get the basics like food and shelter was to work until they were physically unable to do so.
If you want to avoid working well into your 70s, it is a good idea to start saving for your retirement as soon as possible. Even today, social security does not go that far.
Not sure how to start? Talk to a certified financial planner who will help you create a plan based on your current situation.
12. Help your community
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Times were tough for everyone during the Depression, and the fact that most people were going through similar difficulties helped create a stronger sense of community.
The Americans gathered and supported their neighbors - be it a bit of food, spare clothes or a dry place to sleep. Those who had more gave to those who had less whenever possible.
And while social distancing measures during the pandemic will require a different approach to helping your community, there are still many ways you can help those in need.
Make an effort to support local businesses and donate to local charities and food banks when you have the funds.

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