Skip to main content Skip to chat

How to prepare for a recession: a survivors' guide

Recession anxiety is real, but there are things you can do to get ready for a potential downturn.

March 15, 2023

Written by Zandile Chiwanza

A father looking at his laptop with his smiling child laying across his shoulders.
  • Pay down high-interest debt, such as credit card balances.
  • Go back to personal finance basics: track your income and expenses, make a budget, and build an emergency fund in case of job loss or reduced income.
  • Protect your mental health. It's good to stay informed about the economy, but sometimes the news can be overwhelming. 


How to prepare for a recession: a survivors' guide

You may be hearing a lot of talk about recessions lately — perhaps you believe we're already in the midst of one. While no one can definitively say if or when a recession will happen, doing what you can to prepare for a potential downturn is a smart idea. 

A recession, which is defined as a pronounced period of decline in economic activity, can certainly take a toll on your finances. However, there are steps you can take to help insulate yourself against these negative consequences. 

Here's what some financial experts and influencers who have gone through a recession before have to say. 

Prioritize paying off high-interest debt 

A humbling experience with payday loans was a rude awakening that Nathalie Douglas, aka forevermrsbudget, never wants to repeat. 

"I had to seek help from a family member, which was difficult to do as a grown adult," Douglas says. "Explaining why I needed the help was a humbling experience." 

One of the best ways to prepare for a recession is to pay down high-interest debt, such as credit card balances. Credit card interest rates tend to be higher than other forms of debt such as lines of credit or mortgages. The more of your credit card balance you are able to pay off, the lower amount of interest you will pay. 

"When times are tough, and money is tight, it's best to free up as much cash flow as possible," Douglas says. 

Build or repair your financial foundation 

During the "Great Recession" of 2007 to 2009, Caron Matthew, money coach and founder of PocketBrook Inc., drained all of her savings, including her emergency fund, to close on a home purchase. 

"This left me anxious, exposed, and vulnerable to unexpected expenses," Matthew says. 

When she bought a new build, she thought she'd avoided all the unexpected costs that come with fixing up an old home. She learned the hard way that new builds also come with their own set of expenses and doesn't want to make the same mistake twice. 

Next time, Matthew says, she won't make major purchases that put her financial security at risk. "We worked hard to restore our emergency fund and there's no touching it unless it's a true emergency." 

Depending on where you're at in your financial journey, her suggestion is to go back to personal finance basics: track your income and expenses, make a budget, and build an emergency fund that can cover your costs for a few months in case of job loss or reduced income. 

You may also want to review your insurance coverage to make sure you have enough protection but are not overpaying for coverage you don't need. 

Tune out the noise 

Recession anxiety is real. Try to keep a level head and look at the evidence to see if your fears are justified. 

"A recession can have us thinking we'll have to file for bankruptcy or end up homeless if we lose our jobs," Matthew says. "And this simply isn't true for most people." 

Take a step back and think about how it will impact you in five, 10, or even 20 years. You may just be looking at a short-term setback

It's good to stay informed about the economy, but sometimes the news can be overwhelming. You don't have to completely tune it out, but you can control how much you consume by turning off those breaking news alerts and checking in with a trusted news source once or twice a week instead of multiple times a day. And, it's okay to protect your mental health and avoid discussions about a possible recession with others, if it's affecting your well-being. 

Find healthy ways to cope with stress 

Rest. Exercise. Consider taking free courses to enhance your skills. 

Erika Wasserman, a financial therapist, says it's normal to feel stressed about a recession's impact on your future, but try to focus on the present moment and use the words "right now." 

"Recessions do eventually end," says Wasserman. If you're feeling overwhelmed, take some time for self-care. Try some breathing exercises and grounding techniques, and be gentle with yourself. 

Remember that a recession is beyond your control, but you can control how you prepare, react, and your attitude. 

This article or video (the “Content”), as applicable, is provided by independent third parties that are not affiliated with Tangerine Bank or any of its affiliates. Tangerine Bank and its affiliates neither endorse or approve nor are liable for any third party Content, or investment or financial loss arising from any use of such Content.

The Content is provided for general information and educational purposes only, is not intended to be relied upon as, or provide, personal financial, tax or investment advice and does not take into account the specific objectives, personal, financial, legal or tax situation, or particular circumstances and needs of any specific person. No information contained in the Content constitutes, or should be construed as, a recommendation, offer or solicitation by Tangerine to buy, hold or sell any security, financial product or instrument discussed therein or to follow any particular investment or financial strategy. In making your financial and investment decisions, you will consult with and rely upon your own advisors and will seek your own professional advice regarding the appropriateness of implementing strategies before taking action. Any information, data, opinions, views, advice, recommendations or other content provided by any third party are solely those of such third party and not of Tangerine Bank or its affiliates, and Tangerine Bank and its affiliates accept no liability in respect thereof and do not guarantee the accuracy or reliability of any information in the third party Content. Any information contained in the Content, including information related to interest rates, market conditions, tax rules, and other investment factors, is subject to change without notice, and neither Tangerine Bank nor its affiliates are responsible for updating this information.

Tangerine Investment Funds are managed by 1832 Asset Management L.P. and are only available by opening an Investment Fund Account with Tangerine Investment Funds Limited. These firms are wholly owned subsidiaries of The Bank of Nova Scotia. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated.