After many months of media reports predicting a recession is coming, the recession is technically here.
High interest rates, household debt levels, and overvalued home prices have caused a decrease in consumer spending. Many analysts expected a recession to hit us late last year. But Canada’s economy had been performing well.
You may have strong emotions about the word “recession” – confusion, concerns – even fear. But there are actions you can take to improve your well-being and get through these challenging times.
It's understandable that you may be anxious about the recession. But it's important you don't let emotions guide your decisions, especially for your financial situation. Instead, learn more and ask for advice.
How long do recessions last?
More recessions have occurred than you might think – but they’re not too common. In Canada, there have been 17 recessions since the great Wall Street crash in 1929. Five of those have happened since 1970; the last, in 2008-2009, lasted 7 months. Recessions typically run 3 to 9 months.
While you can’t avoid the impact of a recession, you can help protect your finances during one. Unfortunately, a spike in unemployment often occurs during recessions – which makes financial situations more challenging.
To learn more, read: What is a recession, and what does it mean for you?
What to do if you’re unemployed during a recession
Getting laid off is stressful. But getting laid off before or during a recession can feel impossible. Despite big job cuts in technology, those tech workers know they have what it takes to survive. They remember they were hired for a reason, and their skills and knowledge are still with them and relevant.
Taking concrete action during this difficult time will help you move onto your next life chapter.
1. Update your resume
This process can be good for your soul. You’ll see what you’ve done in your professional life and the areas you excel at. Emphasize the skills you can transfer to a new job. If the economic downturn directly affected your job loss, you could let the recruiters know in your cover letter.
2. Look for job openings in an industry that’s hiring
Perhaps it’s time to switch gears. Canada’s unemployment rate is low, and job opportunities remain solid. A quick online search will show you the jobs in Canada experiencing the most demand.
3. Network with your contacts
Call a friend or former colleague. Check in with family members. Put that updated resume and a note on LinkedIn and other social media platforms. A virtual friend may know of a vacant position. They may not know you’re looking, until you let them know. It worked for me when the switch to a teaching career didn’t work out. I told my sister-in-law. She put me in touch with an executive she knew. That led to a 20-year career in financial services!
4. Expand your skills
If you’ve dreamed about working in a different field, now’s a great time to make it happen. You could go back to school. Online learning has come a long way, with a wide variety of courses available. Check that list of job opportunities in #2, and you could take your first step on your new journey. Setting some goals and finding a mentor will help.
Are you worried how you’d pay to go back to school? The Lifelong Learning Plan (LLP) might be an option. This government plan lets Canadian residents withdraw from their RRSPs to pay for a full-time education or training program. Might be worth considering!
5. Start freelancing
Creating a website that highlights your best projects and accomplishments is a good start. Research your industry. That will help you identify potential clients, and then you can send your website link to them. Work your network. Buy a freelancer lunch and ask them how they get work.
6. Apply for unemployment benefits
The Government of Canada encourages Canadians to apply for unemployment benefits as soon as possible, after a job loss. To see if you qualify, check the Employment Insurance Benefits web page.
It’s also crucial to get some advice. Seeing the big objective picture is a great starting point. Advisors look carefully at your specific needs to help you develop a personalized plan.
How can an advisor help during a recession?
A recession is a good time to reach out to your advisor if you have one. Or to find a Sun Life advisor if you don't.
An advisor can help you:
- make well-informed decisions,
- understand what your risk tolerance is,
- make a plan and build an investment portfolio that meets your long-term goals,
- feel assured in times of uncertainty, knowing you've taken steps to prepare, and
- avoid making emotionally driven decisions about your savings.
1 Canadian Investors’ Perceptions of Mutual Funds and the Mutual Fund Industry, Pollara 2019.
2 More on the value of financial advisors. Claude Montmarquette and Alexandre Prud Homme, Cirano 2020.