To slow down recent inflation, the Bank of Canada raised its overnight rate by an additional 50 basis points on
December 7. This suggests a potential economic slowdown in 2023 when coupled with RBC analysts’ forecast of a recession during the first quarter of that year.

Economic indications suggest that while a recession in 2023 is not guaranteed, it is possible that one would start early in the following year.

Whether or not the nation experiences a recession soon, it’s always a smart idea to develop a financial action plan to help reduce your risks. We’ve provided some helpful advice for you to get ready.

  1. Reduce unnecessary purchases
    A large portion of these costs aren’t necessary. It is preferable to divert this money to your emergency savings to make sure you are well prepared for a recession.It could be wise to put off the unneeded expense if you were considering purchasing a new automobile, a recreational vehicle, remodelling your home, or taking an expensive vacation. In the event of a recession, the price of many of these items may naturally decline, therefore you will have wasted the additional money.
  2. Pay down high-interest debt
    Paying down as much of your debt as you can is a good strategy before interest rates start to rise significantly. Your final interest payments will be lower the lower your principal balance is. If you have open credit lines with variable interest rates, then anticipate an increase in those rates during a recession. Canadians are now paying substantially higher interest rates and more fees to their creditors because of the central bank’s recent increases in interest rates.
  3. Pay down high-interest debt
    Economic downturns frequently lead to unplanned events like job loss, reduced hours, and salary cuts.
    Try your best to reduce spending and use that money to increase your emergency savings instead of depleting your reserves. If you’re not sure where to begin, consider the three major categories of spending you might be able to reduce: housing, transportation, or food. I’ve noticed that most people tend to overspend in one area.
  4. Re-evaluate monthly budget
    Determine how much you spend on bills, transportation, groceries, and other essential expenses by calculating your monthly income. Next, look for areas where wasteful spending might be reduced.

Whether or not the nation experiences a recession in the near future, it’s always smart to develop a financial action plan to help minimize your risks.
“Planning is bringing the future into the present so that you can do something about it now.” ― Alan Lakein