1. Start stockpiling—now

The first mistake people make during a recession is continuing to spend as normal, Orman says.

Cutting spending now is Orman’s top tip if you’re worried about a recession, she said in an interview in People magazine. Only buy necessary items and put the rest aside to save.

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2. Start or beef-up you emergency savings fund—now

Once you’ve cut spending, another common misstep is not putting aside money into an emergency fund. We learned yet again during the pandemic why emergency funds are a necessity when many people lost income or their jobs.

A recession could increase uncertainty in the job market, and having an emergency fund to cover costs if you get laid off or have your hours reduced is critical to your financial survival. Orman says aim to save eight months of living costs, but if you don’t get there, that’s all right. Any amount is better than nothing, she says.

“Recessions are Exhibit A, B and C for why you need an emergency savings fund,” Orman wrote in her blog when a recession was threatening in 2019. “Everyone is vulnerable. Everyone!”

One good option for stashing rainy day funds is to save funds in a high-interest savings account(HISA). As a bank account, using a HISA gives you liquidity and flexibility, meaning easy, quick access to these emergency funds when you need them. The benefit if using a HISA over another type of bank account (such as chequing account or standard savings account) is that HISAs offer better-than-standard interest rate on all deposited earnings.

Good options for HISA accounts at online and traditional banks include:

If you'd prefer to simplify your banking and interested in additional perks, consider the high-interest earning rates on the savings accounts offered by fintech firms. Good options include:

  • KOHO Essential: KOHO's free downloadable app allows Canadians to manage their money easily, earn interest on deposits with the benefits of a rewards and perks, including a cash back using the prepaid credit card. Open a KOHO Essential and you can earn 5% interest on savings, 1% cash back on groceries, transportation, food and drink, while enjoying the freedom of a daily-use spending account.
  • Neo Everyday Account: Using this daily-use spending account, you get unlimited, free transactions with no minimum balance requirements, plus open a Neo Everyday Account and your savings interest is 4%.

3. Prioritize paying off debt (particularly credit card debt)

Credit card debt is likely your highest debt in terms of interest rates. And if a recession hits, credit card debt should be the first to go, or it could be the first expense that leads to trouble.

If you lose your job and have your hours cut, credit card interest can be “a disaster,” Orman says in the blog post about preparing for recessions.

A great way to prepare is by looking at other credit card companies that may offer you a deal. If you transfer your balance to a new company, it may offer to charge no interest for at least a year. But these offers can disappear in a recession, Orman says, which is why you should take advantage now.

“Transfer your credit card balances to one of these deals and then make it your priority to get all the debt paid off during the time when you are not charged any interest,” Orman says.

Read More: Find the best balance transfer credit card

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4. Be smart about selling off stock

Sometimes people are reluctant to remove some of their money from stocks that are losing value, possibly because they want to avoid capital gains taxes or worry about missing profits if the stock swings up, Orman says.

But she has a trick to handling this situation. Without giving away all her secrets, her basic principle is that you don’t have to view a decision about selling stock as an all-or-nothing choice. Consider selling a bit at a time to keep more of your money safe and and still reap some of the returns if the stock does take off.

You can read her detailed advice in her guide to stocks. Deciding whether to hold or sell struggling stock is certainly a balancing act.

In a recent podcast episode, Orman also advises that if you like your mix of stocks and have more than five years until you need the money, then “you have got to stay invested — right here and right now is not the time to come out of the markets if you haven't done so yet.”

5. Know your investing (and spending) timeline

This idea highlights mistakes that Orman sees people making. The biggest mistake is the idea of cutting corners, such as not contributing to a retirement savings account during a recession. This potential error is particularly true for younger people who put saving for retirement on the back burner. Instead, treat retirement saving like a bill payment, putting aside the same amount each month no matter what.

But retirees also need to be careful during a market downturn because they may need that cash in the next five years. If that’s the case, it’s important to have a “cash cushion” of three to five years for retirement, Orman says.


1. People: "Experts predict a 'major recession' — here's how to prepare, according to Suze Orman," (April 29, 2022)

2. Suze Orman: "Yes, there will be a recession. Here’s how to prepare," (August 22, 2019)

3. Suze Orman: Resources for stocks and investing


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Amy Legate-Wolfe Freelance Contributor

Amy Legate-Wolfe is an investment junkie, who aims to help others get hooked by providing well-researched advice. After receiving a masters in journalism from Western University, Amy worked for Huff Post and CTVNews.ca, while freelancing for organizations such as the CBC, Motley Fool Canada and Financial Post. Amy Legate-Wolfe is an experienced personal finance writer and freelance contributor working with Money.ca.

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