Published July 14, 2023 • 3 Min Read
Beyond the numbers and statistics, economic downturns can create complex challenges impacting individuals and their families on a deeply personal level. Downturns can bring about job loss, heightened stress and financial struggles, strained relationships and impacts on overall health and well-being. In short, it doesn’t just impact the economy, it can impact us all, on a deeply personal level. Here are a few ways economic downturns impact our human side:
1. Increased stress and anxiety: With uncertain economic indicators, general concerns about the future may trigger a heightened level of stress and anxiety. With the exception of 2008, Canadians have enjoyed decades of a prospering economy and are less familiar with navigating the uncertainties of a downturn.
To help keep stress and anxiety low, find ways to help reduce stress through activities such as regular exercise, walking in nature, meditation, surrounding yourself with friends and family, reducing caffeine intake and finding the small joys in life. It won’t change the current economic reality, but it will help keep you in a calmer state of mind.
2. Job loss: Economic downturns often lead to job cuts and layoffs as businesses struggle to stay afloat. Families may suddenly find themselves without a stable income to support their basic needs. While government support is often available, a downturn may require taking on secondary freelance or part-time job to supplement your income. Those extra dollars flowing into your bank account can help reduce financial stress.
3. Financial hardship: As inflation and interest rates rise, the Canadian dollar reduces in its’ purchasing power. For most families, that means the same discretionary income you had before, now buys less than it previously did. In economic downturns, many families struggle to make ends meet, sometimes choosing between paying rent or buying food. Finding ways to supplement an income can help buffer the sense of hardship. Individuals facing hardship may consider taking on secondary or part-time work, selling unwanted household items, or renting out a basement apartment or additional parking spots to bring in more money. Finding creative ways to generate additional income can help alleviate the sense of lack and boost your spirits simultaneously.
4. Relationship stress: Money is integral to our daily lives. When money matters become strained, it can create relationship tension as disagreements over financial decisions mount. It’s important to tackle these stressors as a team during stressful financial times, prioritizing your relationship. Economic downturns are an outside force impacting your livelihood. Navigating these stormy waters together can help strengthen your relationship and resiliency in the long term.
5. Impacts on health: According to the Canadian Mental Health Association, stress and anxiety can impact one’s overall mental and emotional well-being. Concerns about job security and making ends meet can lead to sleepless nights. And when money concerns strike, people may forego medical attention, further impacting their overall health. “Without health, you have no wealth,” so finding inexpensive ways to stay active and eat healthily is critically important during financially challenging times.
The impact of economic downturns extends beyond the core financial concerns, affecting individuals’ emotional, social and mental well-being. By taking the time to understand the potential human impacts of an economic downturn and remembering they are temporary, individuals deal with the emotional impacts of economic challenges.
This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates.
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