Here’s How To ‘Recession-Proof’ Your Life In Canada, According To A Financial Expert

With everything from groceries to furniture becoming more expensive, you may be wondering how to save money in Canada’s current climate.

Well, that’s a good question, especially since some experts are predicting that a recession may be underway in Canada.

These fears tie in with the Bank of Canada possibly announcing another rate hike on Wednesday 26th October.

Narcity spoke to MoneySense.com Editor-in-Chief Lisa Hannam to get a good idea of ​​where we’re headed, what a recession really means, and what you can do to “recession-proof” yourself.

What is a recession?

This is an important thing to understand before we figure out how to prepare for it.

Simply put, “A recession is defined as two consecutive quarters of negative GDP growth,” Hannam explained.

“However, every recession is different because of the economic problems that are causing the downturn.”

Will Canada have a recession?

While the future is unclear, Hannam points to a number of organizations predicting or preparing for a 2023 recession.

These include the Canadian Mortgage and Housing Corporation, which says that “Canada’s economy will enter a ‘mild’ recession by the end of 2022, but we will see that improve in the second half of 2023.”

Hannam points out, “It’s not a question of if and when [a recession will happen]but how Canadians can prepare for the next 12 to 18 months.”

How can you make your life recession-proof?

According to Hannam, recession safety is about being prepared.

“It’s important to be realistic about your financial situation,” she explained. “And that includes how your job might fare in a recession and what rising costs will mean for you and your family.”

“That means asking yourself how prepared you are for a worst-case scenario.”

Hannam recommends that you set up an emergency fund for exactly what you would expect — emergencies.

“Saving about 3 to 6 or even 12 months of expenses is a great strategy to deal with a job loss, sick leave, an increase in non-discretionary expenses (housing, groceries, etc.), and so on,” she said.

She also added that now is a good time to “review your portfolio.”

“It is very important to ensure your investments are diversified to withstand volatility and perform well over the long term.”

You should also review your budget and expenses and give them a new assessment.

“Take an evening to review incoming and outgoing funds without breaking a penny,” Hannam said.

From credit cards and transportation to groceries and electricity, check everything to make sure it’s where you want it.

“You can do this with pen and paper, a spreadsheet, or an app,” she added.

Ultimately, it could also mean looking at other goals for the coming year, such as postponing a trip or house purchase, or planning a smaller-scale wedding.

Keep the long-term in mind and always remember: “Don’t panic and make short-term changes to your financial situation.”

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The cover image of this article was used for illustration purposes only.

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