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$mart Money - Planning for prosperity after prosperity ends

Some people still have misgivings, butreally things are pretty good aroundhere. We've got an unemployment ratearound four percent. That's about as lowas unemployment rates get.

Some people still have misgivings, butreally things are pretty good aroundhere.

We've got an unemployment ratearound four percent. That's about as lowas unemployment rates get. A differentway of stating this is that we have anemployment rate of 96 percent. Thereisn't a lot of room to improve on that.

We've got world-class natural resourceson scale that's hard to comprehend,never mind appreciate, and they are rightin our backyard. We've got the stuff thatthe world wants, and that's an enviableposition to be in.

Over time, as we return to the times ofabundant prosperity, the last vestiges ofpessimism will slowly fade from the public'sconsciousness. It will be harder andharder to recall the pinch of the globaleconomic slowdown of 2008.

When that time comes some peoplewill once again take prosperity for granted.Once again people will start to factorovertime wages into their monthly budget,as if working overtime hours is a certainty.Once again people will forget thatreal estate prices can, and do, slump.Once again people will spend more thanthey should because they figure it won'ttake too, too long to pay off borrowedmoney.

Taking abundant prosperity for grantedis, of course, not a very smart thing to doin a cyclical, natural resource-based economy.

Abundant prosperity doesn't last forever.We'll have some good times going forward,but sooner or later they will taperoff.

I'm not saying that we are in for someunusual economic catastrophe. I'm justdescribing the ebb and flow of an economiccycle. Sometimes the tide comesin, sometimes it goes out.

A wise person will do what they needto when times are good in order to beready for when times aren't so good. Inother words, to plan their affairs in orderto maintain their own prosperity after thegeneral economic prosperity begins towane.

This isn't a new message. It's the samestory told by Aesop in his fable of the Antand the Grasshopper. The improvidentgrasshopper spent the warm months singingaway, in the foolish belief that thesummer's abundance would last. The ant,on the other hand, worked diligently tobuild up his food stockpile in advance ofthe cold winter months. When summercomes to an end, as all summers do, thegrasshopper starves but the ant is fat andhappy.

As for what will eventually let the airout of the tires of our local economy,there are all sorts of potential culprits. Wecould see a slump in energy prices.Someone might invent a reliable substitutefor fossil fuels. Maybe there arepolitical changes that make our area lessattractive to do business in. Could be thatan improved political climate in a competingjurisdiction makes somewhere elsethat much more attractive. Or it could besomething right out of left field thatnobody sees coming. It could be anything,but eventually it will be something.

On top of that, major change can happenin short order. It was only around1994 when we saw the first outbreaks ofthe current pine beetle epidemic. Now,just 16 short years later, one of the mostimportant industries in a geographicallymassive province has been decimated byan insect the size of a grain of rice. Howmany people predicted that back in1994?

That's why it is important to get youract together now, when times are relativelygood. To make hay while the sunshines, as the saying goes.

Get in the habit of saving some moneyfor the future. If you can't save whentimes are good, you won't save moneywhen times aren't so good.

Be careful of taking on new debt justbecause you can currently afford it. Whatmight be affordable when times are goodmight not be affordable when thingsaren't so rosy.

Take the opportunity to pay downexisting debt when you have the meansto do so. A reduced debt level means aneconomic slowdown is not as ferocious.

I'm not saying that the ride is comingto an end anytime soon, but it would benaïve to think that it will never end. So,just in case, be an ant, and not a grasshopper.Build your stockpile when thedays are warm so that you are in goodshape once the weather turns chilly.

The opinions expressed are those ofBrad Brain, CFP, R.F.P. CLU, CH.F.C., FCSI.Brad Brain is a Certified Financial Plannerwith Manulife Securities Incorporated,Member CIPF and with Manulife SecuritiesInsurance Agency in Fort St John, BC.Brad Brain can be reached at brad.brain@manulifesecurities.ca or www.bradbrainfinancial.com.

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