Japan has 140 businesses that are more than 500 years old — operating around twice as long as the oldest companies in the United States. Nineteen of their businesses claim to have existed since the first millennium.

Let that sink in for a moment. From plagues to wars, natural disasters to collapsing economies, these ultra-durable businesses have encountered it all. And while no single characteristic can justify their longevity, one trait stands out: a lack of debt.

In fact, a study of Japanese businesses more than 100 years old conducted by the Japan University of Economics Graduate School found that more than 25% reported sufficient funds to operate for two or more years. Contrast that to the U.S., where two-plus years of cash flow merely sitting in savings would be considered near negligent by many shareholders. Our culture is one of growth at all costs, with resilience and longevity often taking a backseat to growing margins and higher market share — even if that means pouring reserves back into expanding the business or borrowing to achieve those goals.

Let’s start with a big example. The U.S. government spends about $6.5 trillion, with an income of roughly $4.5 trillion. Let’s break that down into relative terms. With a population of 360 million, that’s about $12,000 in income per person, and roughly $18,000 in spending per person. To make up the deficit, the government then borrows about $6,000 per person.

It doesn’t take a financial adviser to doubt the long-term success of this scenario. Anyone spending 50% more than they earn won’t sustain themselves for long. But cash flow is just part of the equation. The entire U.S. economy has a gross domestic product (GDP) of $29 trillion with total debt at about $36 trillion. The total value of all U.S. assets (business, public companies, real estate, the whole shebang) is estimated at roughly $500 trillion.

Again, big numbers can be hard to comprehend, so let’s scale them once again to a per person basis. Effectively, we can say the country is a business worth $1.3 million with $80,000 in sales (GDP) and $100,000 in debt. When scaled, do these numbers seem far out of line? I think not. This way of thinking puts debt into perspective.

Based on all of this, how should we think about debt?

Debt isn’t necessarily something you must avoid altogether. Rather, strive for the right amount, and type, of debt — while understanding that it raises your risk level. Debt combined with volatility impacts your ability to weather storms. As leverage increases, so does your overall exposure. And human nature leads most people to wildly underestimate their risks.

Consider that debt magnifies your gains and losses. When things are working in your favor, debt used as leverage can augment your return. But when circumstances change, that same leverage can multiply your loss. Today, the commercial real estate market is experiencing this firsthand. Large investors are throwing in the towel and selling prime properties at fire-sale prices, because the majority are over-leveraged while vacancies continue to rise, leading to lower cash flow. In short, they’re pinched. Occupancy income has fallen, yet the debt payments must be paid.

When individuals take on debt, blind optimism about their prospects often outweighs caution over a potential setback. Debt is an easy way to “pull your future forward.” Want something, but can’t afford it? Debt makes tomorrow happen today. But if you’re like me, things tend to happen at the most inopportune times. Furnaces go out in February, and air conditioners stop working in August. Having reserves for those repairs makes weathering the storm easy. When you mentally plan for the unexpected, it becomes a little less scary. Things happen — problems arise, markets fluctuate when we least expect it. That’s why we must be careful about using debt and mindful of keeping a reserve.

While investing, people also often begin utilizing leverage at the wrong point in the investment cycle. When life is good — when asset prices are rising, and investment returns are positive — leverage pays off in the form of a higher return. But when conditions turn negative, everything goes into reverse. Debt can be penalizing, and it’s deadly if used incorrectly.

The riskier the investment or lifestyle, the more cautious one must be with leverage. If your income or business is uncertain, carefully assess your use of debt. Conversely, if your business is highly predictable or your income guaranteed, you can consider using leverage prudently.

The right way to think about leverage is best captured by this old maxim: “There are old investors and there are bold investors, but there aren’t many old, bold investors.”

If your goal is to endure, akin to those long-lasting Japanese businesses, you must guard your cash reserves and be selective with debt. Resist the temptation to “pull the future forward,” and be meticulous about saving. Generations to come will thank you for it.

Steve Booren is the founder of Prosperion Financial Advisors in Greenwood Village. He is the author of “Blind Spots: The Mental Mistakes Investors Make” and “Intelligent Investing: Your Guide to a Growing Retirement Income.” He was named by Forbes as a 2021 Best-in-State Wealth Advisor, and a Barron’s 2021 Top Advisor by State. This column is not intended to provide specific investment advice or recommendations.