There’s still some debate going on as to whether or not Canada was reallyin a recession from 2008-2010 but whether we were there officially or not, things did not look good. Our unemployment rate went up, our GDP went down, and our housing market got really messy. The good news is that things are on their way back up! Experts say that we can expect housing to balance itself back out in the next 12 months or so, and our exports our back up to pre-recession levels. Still, for many of us it doesn’t feel like 2010 was that long ago, and we’re still reflecting on the lessons we learned in the most current recession. Now let’s just hope that we remember to live by them.
The first lesson we learned pertained to our emergency funds. Those who didn’t have one at all undoubtedly felt this lesson the most, as they learned how important it was to have some money socked away for a rainy day (or for several after you’ve lost your job.) But even those who thought they were prepared for the worst found out that they weren’t, and at a time when they could least afford it. It used to be that having a financial cushion, called “the emergency fund,” of 3 – 6 months was enough. Once the recession hit though, people found out that was no longer enough. It took longer than that for them to find work, and things are simply more expensive than they once were. Whether you’re using a HELOC, a high-interest savings account, or some other type of savings for your emergency fund, make sure you always have at least 8 – 12 months of income sitting in it.
The next lesson learned might be one of the most difficult for Canadians to learn – that’s the ingrained belief that we must go to post-secondary school, even it means borrowing against every last nickel to do it. Yes, schooling is important and we’re not here to tell you otherwise. But the idea that people should go to school just because “it’s what you do” is over. There is no longer the guarantee that work will be there for you when you graduate, tuition is climbing steadily higher, and Canadians have more debt now than ever – without taking on an additional student loan. If you don’t know what you want to go to school for, don’t go. It’s as simple as that. Explore what you love, find out where your passion lies, and once you do, then go to school to develop the skills needed for a career in that field. If you do know what you want to do, consider taking a few courses part-time and paying for it as you go out of your own pocket. You’ll be in a much better position when you are finished.
Lastly, another hard lesson to learn during the recession was not to buy a home ; and this is again, if you’re buying it simply because “it’s what you do.” Again it used to be thought that when you were done school or starting a family, you took on a Toronto mortgage too. But that’s no longer the case. With home prices rising, not everyone can afford a mortgage; and if you don’t know what type of home you want or what your lifestyle will require in the next several years, it might be better to rent than to buy, at least temporarily. And it’s an option you should at least look at, especially if you think you’ll be counting pennies for your mortgage payment.
