The Canadian economy, for the third time in the last five months, has shed jobs. While the US economy has been seeing an increase in jobs added to the economy, Canada has been struggling a bit. Indeed, the situation appears to have changed since Canada pulled its economy out of a recession with the help of hiring.
Now, there are concerns that the Canadian economy might slow down, and even worries that there is a housing bubble on the verge of bursting. As you consider the future, it’s time to consider whether or not you would be ready for an economic slow down.
Preparing Your Finances for a Recession
While no one’s saying that Canada is headed for a recession right now, there are nevertheless signs that an economic slowing may be coming. At the very least, the economic growth in Canada might be decreasing in speed. The Bank of Canada has kept its interest rate at 1%, and that means that inflation doesn’t seem to be worrying anyone right now.
Even if Canada doesn’t see another recession anytime soon, it’s still a good idea to always have your finances ready for an economic setback. Canadians aren’t financially stupid, but they have been making some decisions that reflect some of the mistakes we’ve already seen in the United States. One of these mistakes is an increase in household debt. If an economic slowdown is coming, Canadians need to be ready by having their finances in order.
As always, the basics of personal finance are vital in preparing yourself for what’s next. You need to pay down debt, live within your means, build your emergency fund and save for retirement. It’s always a good idea to shore up your finances when you can. When things are going well, it’s essential that you practice good financial habits. When you prepare during the good times, the tough economic times won’t have as big an impact on you, since you will have something to fall back on.
If you have extra money, including what you get from your tax refund this year, it’s a good idea to use at least some of it to prepare your finances for the future. You never know when the next recession is going to hit. Signs indicate that an explosive economic recovery isn’t likely to come, and things might be a little dicey for everyone for the next few years. As a result, it’s a good idea to be prepared.