Many analysts are concerned that the Bank of Canada’s push to raise interest rates would lead to a recession.
Given that this will be the first one for young Canadians, particularly Gen Z, many are wondering if there is cause for concern and what to expect.
Although a large portion of Gen Z have not personally experienced a recession, however, the generation did get a taste of what may normally be expected during the height of the COVID-19 pandemic. Businesses cut their budgets during that recession, which resulted in job losses.
So, what can we expect in a recession for young people in Canada today who are also navigating the start of their professions and personal finances?
What happens when there is a recession?
You’ll see an increase in unemployment, a declining stock market, and a decrease in consumer spending during a recession. Fears of losing one’s job and a need to save money for contingencies increase.
One factor that may have an impact on future earnings growth is starting off with a lower salary. Due to a lack of secure employment, Millennials initially worked contract jobs for a significantly longer period of time than previous generations.
Inflation can fall when individuals spend less money, but this won’t happen right away until the economy is more solid.
Interest rates decline due to a combination of circumstances that include decreased consumer spending, a dropping stock market, and a lack of employment possibilities. This encourages more people to borrow and aid in restoring economic stability.
Should a recession cause young people to freak out?
Young people should not panic, but if they do, it’s always a good idea to have a few backup plans.
Making a list of other comparable businesses or organizations, both inside and outside of your industry, that you might be able to work for, depending on your skill sets and expertise, could be a good place to start if you are concerned about being laid off.
There are so many options, and if one doesn’t pan out, it can be painful. However, if you change course, you might find something that may fit your interests and points you in a new direction.
What can young people do differently to get ready this time?
Recessions can be a source of anxiety, particularly when it comes to finding work, but today there are more options for people to make money and advance their careers.
For instance, more young people are starting internet businesses, working as freelancers, and utilizing social media to their benefit to supplement their income.
Compared to the time of the previous recession, this one is better for us. Finding those possibilities and changing your outlook and thinking is important.
- Young folks would do well to consider how they might plan their savings at this time.
- If you have debt, concentrate on paying it off, and if you haven’t started investing, start by learning more.
- Young people shouldn’t be reluctant to make investments now. You can reduce your anxiety and help yourself make better decisions by pausing for a moment to consider the future.
What is the ideal amount to save as a cushion?
In general, it’s recommended to set aside money for three to six months’ worth of expenses, but people can use that as a beginning point and adjust it to fit their circumstances and needs.
Also, keep in mind that paying off your debt can offer you more time to concentrate on setting aside money for contingencies.
Pay off all the high-interest debt once your emergency fund reaches the level that you find comfortable so that you are free of that monthly commitment. This will allow you to free up a few hundred dollars per month, which might make a significant difference.
The question of What Gen Z can expect during a recession gives a straightforward answer “they should expect what will naturally happen when there’s a recession.” Meanwhile, as the answer is obvious, it’s more of Gen Z preparing themselves for what might be uncomfortable and bracing themselves ahead of time. This is why young people should pay more attention to their spending, savings, investments, and settling their debts.
A lot of young people are caught up in the web of credit card debts and payday loan cycles. Having this difficulty with a recession in the way can make life a bit difficult. But it doesn’t have to be difficult. This is why we have debt experts at EmpireOne Credit to help people get out of debt that burdens them and live a better life with or without a recession. We offer free, friendly, and non-judgemental consultation.