More than a quarter of Canadians feel they won’t weather the recession financially, according to a new poll.
20% of respondents to a survey conducted by Yahoo public opinionthey say they won’t be able to withstand more than a month of recession.
38% report they are likely to survive the recession for six months, but not much longer.
About a third (34%) of respondents believe they will emerge from the recession unscathed. According to the results, these respondents were most likely to be over the age of 55 and earn more than $100,000.
“Navigating a recession is like treading water, with roughly one in three Canadians having a life preserver that will keep them alive for a year or more.” Yahoo Finance Canada.
“Almost as many people are already out of breath and would die within a month if the waves were any more unstable, but Balance believes they can survive for about six months or so if needed. I have.”
Many Bay Street economists predict a recessionThe first half of next year will be defined by a contraction lasting at least six months as high inflation and rising borrowing rates hit consumer spending, the housing sector and the labor market.
Arguably, there are already signs of tougher times, as many companies, especially the North American tech sector, have announced mass layoffs.
In anticipation of the recession, nearly three-quarters (74%) of survey respondents said they had cut spending in the past month to cope with the rising cost of living. These respondents tend to be younger and have lower incomes.
The survey also revealed that 27% are turning to credit cards to make a living and 21% are cashing in on investments to pay off debt or strengthen their household balance sheets. I was.
How to Prepare Your Finances for a Recession
According to personal finance educator and best-selling author Kelly Keane, there are three important rules to keep in mind when preparing your finances for a potential recession.
Cash is king. Cut as much as you can to bring in more income, she says.
“Many Canadians have not recovered financially from COVID. It’s important to bring back your emergency savings. We need not just savings, but cash on hand,” she said.
To find extra cash, she gets rid of unnecessary subscriptions (less-used streaming services, online cloud storage, home delivery kits, etc.), finds better deals on mobile and internet plans, home and car. Suggest shopping. She buys insurance packages and buys refurbished and used items to save her season on expensive holidays.
Keehn also suggests investing in your career.
“Even if you had an average salary, you could make millions of dollars in your lifetime. Are you investing in your career? Investing in improving your skills and knowledge.” Should I invest in a resume service, a career coach, or spend more money? Can’t spend time networking on LinkedIn? If they think they need to go back to school, RRSP can be used to fund education and skills acquisition,” she said.
But there is no doubt that some people will be hit particularly hard financially by the recession. The survey found that 27% of her respondents use credit cards for a living.
With credit card interest rates around 20% and above, these individuals must first exhaust their other options.
“Many people have balances on credit cards with very high interest rates that they don’t want to pay off using lower interest credit lines (for fear of bankrupting their cards again when interest rates drop to zero). These people may need to talk to a nonprofit credit counselor to help them budget and understand how different debts work.
Another option is to call your bank and get a low interest rate product.
For example, a person with a $10,000 balance and minimal payments on a 24% interest credit card could save over $4,000 by switching to a 12% interest card.
“Sure, the low-rate card doesn’t have any extras, but if you’re trying to pay it off, you don’t need perks,” she said.
The survey surveyed 1,528 Canadian adults who were panelists for Mul Voice Canada between October 28th and 30th. The study has an estimated margin of error of +/- 2.5%, 19 out of 20.
Michelle Zadikian is a Senior Reporter at Yahoo Finance Canada. follow her on her twitter @m_zadikian.