Here’s how you can recession-proof your finances

It’s not too late to take action to protect your finances as the cost of most things balloons.

These classic strategies can help you save money, spend wisely and protect your assets (what you’ve worked so hard to build up) throughout an economic downturn.

And, even if you only implement a few, you’ll be financially stronger for it.

Be ready to change jobs

Good news is that the labour market is still quite strong in Canada.

But no one knows for how long, and if a recession takes a strong grip, jobs could be harder to find.

My advice is to be ready in the event you need to look for work. This means ensuring your resume and LinkedIn profile are up to date, that you have references waiting in the wings and keeping a close eye on postings that could be a great career fit for you.

A little bit of networking can also go a long way right now, so if you feel comfortable with it, get out and meet new people who have the potential to hook you up with a fresh opportunity.

Here’s a pro-tip for networking; if you’re asking someone to have a coffee with you, offer to pay for their beverage. Most will decline and will treat you instead, but it’s custom for the asker to pay.

Take care of your pennies and the dollars will take care of themselves

Start your budget with a savings goal and then plan your spending around it.

Watching your bottom line means watching where your pennies are going. Track everything — income and expenses. If you’re into spreadsheets or charts, build your budget using one. If you’re more kinaesthetic, you can keep your money and receipts in jars or envelopes.

I’m a big believer in using technology to help stick to your budget. On payday, arrange to have essential household expenses like phone, cable and utilities paid automatically. You could even set up automatic withdrawals toward your savings and investment accounts.

And budgeting apps, well, they’re awesome, but they really only work if you use them regularly and are strategic about what you want to spend in every category.

Say no to additional debt

Better planning and budgeting might help you free up more of your income for debt reduction and savings. And consolidating your expensive debts (anything with an interest rate over 10 per cent) with a low interest lending product could free up more money for you to either pay down your remaining consumer debt faster (especially if it’s on a variable rate because those are rising) or to save more.

I know you’ve been cooped up for two and a half years, but I can’t stress enough that taking on additional consumer debt as we head into a potential full scale recession is a bad money move. Do everything you can to avoid it, which might mean delaying a car purchase.

My other tip here is don’t overpay low-interest debts if you don’t have a well established emergency fund of four- to six-months worth of essential expenses. Yup, you read that right — you need to keep even more cash on hand during a recession.

Students, your student loans and lines of credit are good debts so please don’t cancel your plans to return to school next month because you don’t want the loans.

Ecoconsciousness is urgent — and a great way to save

Doing your part to reduce energy consumption and waste will save you money during a recession.

Trim utility bills by washing laundry in cold water, properly sealing doors and windows, turn your AC down and ensure the unit, plus your furnace, are properly maintained. If you’re considering home upgrades, retrofit bathrooms and appliances with water and energy saving fixtures. Cringing at the cost of fuel? Run, walk, bike, blade and take the bus.

Canadians can save big dollars and reduce waste by making larger items like cars, electronics, and furniture last a bit longer than originally planned. And, smaller green initiatives can save a few pennies, too; use resealable containers rather than plastic baggies and carry a travel mug or coffee and water. Do what you can to completely eliminate food waste.

Good job security? Do these two things

By now you’ve likely cut out the luxuries like clothing, trips and takeout.

You may have even rented out your basement or turned your web design skills into a side hustle. You’ve increased your insurance deductible. If you find yourself with a little flexibility in your budget, I have two recommendations for you; first, put a few extra dollars into your high-interest savings account (I’d consider moving your account to a bank paying higher interest than the one you’re currently at); and second, invest money through this dip. We have an unprecedented opportunity to “buy in” and invest at reduced prices — in the investment market but also in real estate if that was on your radar (higher rates are continuing to cool prices down).

Also, when it comes to investing, keep your cool. Knee-jerk reactions often result in you losing money in the long term.

This too shall pass. Recessions don’t last forever. Stay the course and get good financial advice.

This article was originally published in The Star. Lesley-Anne Scorgie is a Toronto-based personal finance columnist and a freelance contributing columnist for the Star.