Posted by Mike Smith :: January 31, 2009 @ 6:40 am

In my recent post about stockpiling cash, I discussed how the economic downturn was causing some people to go into survival mode. While going into survival mode during tough times seems natural, how survival mode is defined seems to vary from person to person.

The reaction I previously considered was the accumulation of necessities and a trend toward self-sustainability. Alternative reactions include denial, entitlement, or worse. Reuters described this reaction as survival panic. Changes in financial situation, or even the fear of change, may trigger an extreme reaction.

From theft to violence and depression to drug use, some people handle this change in a destructive way. Does the inability to maintain your lifestyle inspire you to keep up appearances by stealing what you can no longer afford? Does anger at a former employer inspire you to take out some form of revenge? Are you unable to cope and looking for a way to escape?

Experts expect many of these scenarios to play out. The Reuters article reminded us how ingrained consumption is in our culture. After years of easy credit and growing investments, it’s easy to see how these habits formed. Abruptly changing these habits out of necessity will surely cause some adverse reactions.

Thankfully, a positive reaction is also possible. In addition to the positive survival mode described previously, there has been a general trend towards reduced consumption and a rise in frugal behavior. Only time will tell whether these good habits will continue as economic prospects improve. As I implied in Why Spending Less Than You Earn Seems So Difficult, bad habits are more likely to stick around when the root cause of the habit is resolved. My hope is that the negative habits created during this downturn are outweighed by the good. Do your part and follow the advice offered in Changing Your Habits with the Slowing Economy.

How are you coping with the economic downturn? Share your ideas here!