The Upside of a Downturn

President Barack Obama’s campaign theme was “Change.” We’ve all seen plenty of change in the past year, specifically economically and financially. Much of this change most people would label as negative. If you take into account the banking crisis, the growing numbers of people facing unemployment, the double-digit losses in so many 401(k)s and retirement plans, and the number of cities and states whose budgets are upside-down, then it does paint a pretty dismal picture.

And some—those hoping the government will save them or those who are not willing to change what isn’t working—will face a very rough road ahead. No doubt most of us will have to do many things differently, regarding our money, our investments and our businesses, in order to not only survive but to thrive in this economic climate.

That being said, and being the optimist that I am, I have to look and ask, “Where’s the upside in all of this?” And I do believe that there is not just one diamond in this rough, but there are three positive gems that could manifest out of this turmoil.

1) A Wake-up Call for the World Sometimes things have to get bad before we take action. This time in history could very well be our fi nancial and economic wake-up call. There are many pieces of this puzzle that are broken, and it will take more than a new president, new rules for Wall Street and a few crooks going to jail to fix it all.

This is undoubtedly a global problem, and it will take resources from around the world to turn this one around. I trust this is a wake-up call for our political, business and financial leaders that real and tough changes have to be made, now.

There is an even more important wake-up call for the individual, if you’re willing to tell yourself the truth. That wake-up call is this: You can no longer be clueless about your money. It is the realization that turning your money over to the so-called fi nancial experts isn’t working. It is the light bulb that goes off when you see you have an absolute need for real financial education. No more disguising a sales pitch for sound fi nancial advice. No more taking the advice from fi nancial advisors who don’t practice what they preach, who tell you what to do but don’t do it themselves. And no more allowing ourselves to be ignorant enough to blindly follow their recommendations.

Fortunately, the message is spreading. Peter Applebome, a talented journalist, recently wrote in an article for The New York Times titled, “Contemplating the Boobs We Were,” “…a yearend toast to us all—the boobs and easy marks who from time immemorial have mastered the art of buying high and selling low, investing in bubbles as transparent as an open window….”

He goes on to say, “…is there anything we can learn from this latest round of financial catastrophe?… So, here’s a revolutionary idea: Maybe it’s time we even start thinking about ways to teach [people about money].”

Applebome ends with this: “One lesson of this year is that these days, no one, not even the most fi nancially secure, can afford to be stupid.”

What a novel idea—teaching people about money. I’ll be that optimist who says that maybe this is the wake-up call to the masses really taking hold. Is the general public fi nally recognizing the vital need for true fi nancial education? That would be a breakthrough and a positive result from this economic breakdown.

Sometimes it takes a wake-up call to bring us to our senses. I optimistically trust that these cataclysmic events unfolding will serve as one giant wake-up call so that we as individuals become aware, educated and in control of our money. And in the bigger picture, that the same holds true for our cities, states and nations. Ignorance is not bliss; it’s foolish, expensive and painful.

2) Adversity as a Gift
Most of us are taught, beginning in kindergarten, that mistakes are bad. How often did you hear, “Don’t make a mistake!” In reality, the way we learn is by making mistakes. A mistake simply shows you something you didn’t know. Once you make the mistake, then you know it. Think about the fi rst time you touched a hot stove (the mistake). From making that mistake, you learned that if you touch a hot stove you get burned. A mistake isn’t bad; it’s there to teach you something.

In the economic times ahead, most people will encounter adversities at one point or another. Most people view adversity the same way they view mistakes: They see it as bad and something they want to avoid. It’s time for a new outlook.

Donald Trump gave me an insight about success that I will not forget. He said that the No. 1 key to being a successful entrepreneur or businessperson is how you respond to adversity. When faced with a hardship, do you crumble and quit, or do you stand up, take action and push through? When confronting a tough problem, do you take it on, learn from it and grow, or do you let the problem beat you down?

Adversity has the power to build your character and strengthen your spirit. It also has the power to weaken you and cause you to contract. It’s all a matter of how you react to the situation. I have faced many tough times in my life, and although it was hell at the time, I can honestly say that each time I pushed through it I became stronger, smarter, more confi dent and more successful. For me, adversity is a great teacher.

One of my all-time favorite books is As a Man Thinketh by James Allen, published in 1902. The message throughout the book is that your thoughts create your reality. It’s a very small and simple book. One of the most memorable lines in the book for me was this: Circumstance does not make the man; it reveals him to himself.

I interpret this to mean that how you handle the different situations in your life—good, bad and indifferent—determines the quality of your character. It reveals who you are.

So how you and I respond to these unfolding economic times will be very revealing and, ideally, enlightening.

3) Opportunity Comes Knocking
The third benefit this financial dilemma presents is the abundance of opportunities surfacing. The only question is, do you know what to look for to take advantage of them?

Real estate prices are coming down—opportunity. Business needs are changing—opportunity. Stock prices are correcting—opportunity. Innovation and creativity will rule— opportunity. Small business is growing—opportunity. Etc., etc., etc.

Are you focusing on the potential opportunities ahead, or are you cutting back, clipping coupons and reverting to survival mode? In my opinion, this is the best time to get educated and to start seeking out the opportunities—opportunities that not only allow you to survive, but to thrive and prosper in the years ahead.

As Charles Dickens wrote, “It was the best of times. It was the worst of times.”

May these be your best of times.

Kim Kiyosaki is co-founder of the Rich Dad Company, a speaker and best-selling author of Rich Woman.