Economists remain unsure whether there is even going to be a recession. Honestly, this is great news. It means even if there is a recession, it’s going to be a mild one. After several years of turmoil in the markets, it looks like investors are still interested in getting in on the market after mild drops.
That being said, there still could be a drop in the near future, and it could be this summer. If that happens, it likely isn’t going to be by the 40% we’ve seen in recessions past. However, it could still sting.
That’s why today I’m going to help you plan for a mild recession in case Canadians do enter one. Even if it is a mild one.
Create an emergency account
If you have savings set aside, that’s great! But how much is enough? Now is the time to set aside as much cash as you can, as inflation and interest rates continue to climb higher. You never know when a sudden large cost is going to arise, or worse, you get laid off. Something that could indeed happen during a recession.
That’s why making an emergency account is a prudent idea. Keep money in something like a Tax-Free Savings Account (TFSA) and you can take it out whenever an emergency happens, if ever. Therefore, should a recession lead you to need that cash, you can lean on it immediately.
How much is enough? An emergency account should be around three months of your salary. But don’t stop there if you hit that number, continue to grow it in case something truly serious comes your way.
Find easy side hustles
If you’re not able to create savings for an emergency account, then consider taking on side hustles while you have the time and flexibility, without the necessity of having to take on part-time jobs.
It doesn’t have to be difficult, and can be quite convenient! If you’re great at editing, consider finding editing jobs in the evenings and weekends to take on through sites like Upwork. Same if you’re great at graphic designing, translating, or anything like that. These are short-term gigs that can offer you hundreds of dollars in some cases.
Another great option is to look through old photos. If you have some great ones from trips abroad, for example, consider selling them to sites like Alamy and Shutterstock. There are lots of ways to create passive income, so look at what your life offers you in terms of time, and fill that time with cash!
No time? No problem
Not everyone has the time to take on another job. Worse, you would not want to take on another job if it meant your full-time position suffers. That’s why in any scenario, create stable investments that will see your emergency fund rise steadily, with low risk.
A great option to consider are Big Six Banks, and Toronto Dominion (TSX:TD) is definitely one I would buy while it’s down. Its investment in the United States has led to shares dropping. However, this could be an excellent time to pick it up. These banks tend to come back within a year of hitting 52-week lows, so you could see a surge in returns by investing today.
TD stock also offers a 4.91% dividend yield as of writing. So you can use that to reinvest in your portfolio again and again to provide even more income. What’s more, when a recession is over, you’ll have created strong habits that will last you a lifetime!
