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By now we've all heard that Canada, and the globe, is projected to experience a recession this year. This is mainly due to COVID-19 and how this pandemic has halted many industries and economies.

This isn't the first time that we've experienced a recession and chances are — it won't be the last. So how can you recession-proof your money and protect it?

To be prepared for recessions, there are a few key things you should do all the time as part of your financial planning.

1. Keeping debt low

It's always a good idea to stay on top of debt. A healthy and balanced financial plan understands your assets and liabilities, referred to as your expense ratio. If you have mountains of credit card debt when a recession hits, you'll struggle to make payments. When times are good, this is when you should be keeping debt low.

2. Saving for emergencies

The other vital part of any sound financial plan is to have savings set aside for emergencies. These savings are separate from your long-term savings for retirement or specific financial goals. This emergency fund is what you'll use in times of unforeseen crises, such as a recession.

3. Understanding your "nice-to-haves" and your "must-haves"

Financial planning means knowing what your actual expenses are and what are just "nice to have." In a recession, you're going to have to give up that monthly hair appointment or the fully loaded gym membership. Your "must-have" items on your budget are things like rent, food, and utilities. When we live our day-to-day life, we factor these and some of our "nice-to-have" items into our budget. In preparation for recessions, have a clear idea of what you need vs. what you're going to have to cut.

4. Know your risk tolerance

The big issue with recessions is that they're going to affect your investments. When the market takes a dip and industries are affected by outside sources, your investments will be affected. Understanding your risk tolerance is critical. When you see this dip, how are you going to react? Panicking and selling everything to avoid more loss could end up costing you a lot more in the future.

Planning for a recession is essential. The other key aspect of surviving a recession in good financial standing is being able to act quickly in the early stages of a recession. These are the things in your plan that you're not doing on a daily or monthly basis but that you should shift to quickly.

5. Cut and lower expenses

Remember those "nice-to-have" items? Yep, you guessed it, time for them to go. Even with all your planning and saving, you need to lower your expenses and overhead. A recession can affect the cost of goods as well as your income, and you should start living within a more manageable budget as quickly as you can. This is your "recession budget," and it will be very different from your everyday budget.

6. Look for creative ways to save

There are many creative ways to save money during a recession. Look for coupons for groceries. Look for membership points as a way to make points or money back on the necessities you still have to purchase. Consider trading your time for cheaper services. Some gyms will allow trades for more affordable memberships, all you have to do is work reception or clean. This is, of course, only an option when the gyms are open.

Financial planning means planning for the future you dream of while preparing for the bumps along the way. We guarantee that no one expected a global pandemic when they were considering their financial goals for 2020. We don't get a say in how things are going to play out. What we do get to decide is how we plan for these obstacles.

If you need help creating a comprehensive financial plan to prepare for the unknown, we're here to help. Get in touch with someone on our team today to feel more financially secure tomorrow.