June 7, 2023

How to Recession Proof your Finances

As the cost of living continues to rise, property prices become increasingly volatile, and interest rates fluctuate, it’s understandable that many of us are feeling rather uncertain about the our future finances. While it’s true that there’s a potential for Australia to face a recession, it’s always wise to focus on what we can control rather than get overwhelmed by what we can’t. It helps to prepare for the worst but hope for the best! In this blog post, we’ll explore some practical tips and strategies to help you protect your finances and recession-proof your wealth. Whether it’s building up an emergency fund, reducing your debt, diversifying your investments, or finding new ways to earn income, there are plenty of steps you can take to secure your financial future. So, let’s dive in and learn how to thrive in the face of economic uncertainty!

Let’s focus on some simple, practical steps that we can take to recession proof our finances today.

Build up your stash of emergency cash
Do you have a stash of cash set aside for use in case of emergency? Personally, I call this my OMG Fund. Others call it the Rainy Day Fund, Emergency Fund, or the F**k Off Fund. Call it whatever you want but please make sure you have one. The ‘gold standard’ of emergency funds is having the equivalent of between 3-6 months worth of living expenses set aside. Setting aside as little as $1000, however, is a great place to start. Continue to build up the balance over time and enjoy the peace of mind that despite whatever may come your way, you’ve got a financial safety net ready to catch you.

Prioritise paying down high interest debt
High interest debt is taking your financially backwards and fast. So it’s worth prioritising paying it down. I define high interest debt is anything that costs you in excess of 10% in interest. Paying above 10% in interest is expensive AF. Debt that attracts these kind of interest rates are typically credit cards, personal loans, possibly  leases or even some BNPL service once you add in late fees. So work to pay these off with any spare funds, extra income or windfalls you have. Once you’ve done that, you can redirect that money towards your exciting financial goals instead. Boom.

Find creative ways to save
Review your recent spending and budget to identify areas where you can save. Is it cancelling subscriptions you no longer need, negotiating a better deal on your insurance policy or perhaps eating out less frequently in favour of entertaining at home? Or perhaps instead of relying on traditional methods to cut back on expenses or increase income, think outside the box. For example, you could try swapping goods or services with friends or family, taking advantage of rewards programs, or using coupons and promo codes when shopping. You could also consider finding free or low-cost alternatives to expensive hobbies or activities, like hiking or picnicking. By being creative and resourceful, you can find new ways to save money and build your savings buffers.

Review the interest rate on your Home Loan:
Home loan rates have been rapidly increasing inline with the Reserve Bank of Australia’s (RBA) eleven recent cash rate increases in an effort to stem the rise of inflation and the cost of living. What this means is that the cost of your home loan is going up, so now is the perfect time to review what interest rate you’re paying and see if you can find a better deal. You can jump on the internet and scour the online offerings or call a mortgage broker and get them to do the heavy lifting for you. You may find that you secure not only a better rate but a cash incentive if you refinance to a new bank.

Review your energy consumption and supplier:
In the recently released federal budget, the treasury has tipped energy costs to increase by a further 50% in the coming two years delivering another cost of living blow to households. With this in mind it’s worth setting aside time to review both your energy consumption and your energy provider to reduce your costs. To review your cost of energy simply grab a copy of your latest energy bill and head to the Energy Made Easy website. There is a plethora of small daily changes that you can make that add up to big savings on your power bill like switching off lights when you leave a room, turning off appliances at the wall to save 1%-5% energy, hanging clothes on the line instead of always using the dryer, checking the energy efficiency ratings of appliances, to upgrading the insulation in your home.

Keep your CV & skills fresh:
It’s important to regularly update your CV and keep your skills current, even if you’re not currently job searching. You never know when an opportunity may arise that you want to pursue, and having an up-to-date CV and relevant skills can make all the difference in landing your dream job. Additionally, regularly reviewing and updating your CV can help you identify areas where you may want to improve your skills or seek out new learning opportunities to further advance your career.

Look for additional ways to boost your income
There are many ways to boost your income, including getting a higher-paying job, taking on freelance work, starting a side hustle or small business, investing in the stock market, or renting out a spare room on Airbnb. Another way to boost your income is to improve your skills and knowledge through education and training, which can qualify you for higher-paying jobs or promotions. Additionally, you can negotiate for a raise or seek out opportunities for overtime or bonuses in your current job. Whatever route you choose, it’s important to be proactive and take action to increase your income and achieve your financial goals.

Finally, stay cool. It can feel scary when there’s financial and economic uncertainty in the air but as the saying goes, ‘this too shall pass’. It’s important to maintain a long term perspective and avoid making any hasty decisions based on short term hype. Stay focused on your financial goals, stick to your plan and put your energy into what you can control.


The information in this article is for general information and educational purposes only.  Nothing contained in it is, or is intended to be construed as individual financial, tax or legal advice.

You need to decide what may work best and is suitable for your own personal or business needs. I do not have your personal information, your individual, business or product facts or situation in mind when I provide this information and any content. It does not constitute nor should it be treated as formal advice of any type or nature. You need to make your own enquiries and analysis to determine if any of the information is suitable for your own particular purposes and suitable for your situation.

You should, before you act or use any of this information, consider the appropriateness of this information having regard to your own financial situation and requirements.