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The article is titled “3 ways Canadians can take control of their finances in an age of economic uncertainty.” It was originally published on July 15, 2025 and is authored by Omar H. Fares, Assistant Professor, Faculty of Business, University of New Brunswick.

Canadian consumers are beginning to move from short-term economic concerns to a more persistent mindset of financial precarity, and it’s starting to affect how they live.
People are delaying major purchases and starting to show signs of subscription fatigue, according to recent findings. One recent survey found that 70 per cent of Canadians are deferring major life decisions, including home ownership and family planning, as a consequence of this sustained economic uncertainty.
This anxiety is now reflected in broader sentiment. The Bank of Canada’s latest Consumer Expectations Survey found a sharp rise in economic pessimism. About two-thirds of Canadians now anticipate a recession within the year, up from 47 per cent in late 2024.
Concerns about job security, debt repayment and access to credit are also mounting. For the first time since early 2024, more consumers report cutting back on spending. Home-buying intentions are declining, especially among those expecting a downturn, and an increasing share of mortgage holders plan to reduce expenses ahead of higher renewal payments.
Consumers are no longer just reacting to inflation or interest rates, but adjusting to the idea that financial uncertainty may be here to stay.
Why today’s economic anxiety feels different
While the link between economic uncertainty and reduced spending is well established, what makes today’s situation different is the convergence of multiple pressures facing consumers.
This includes a challenging job market — particularly for younger Canadians — concerns about the disruptive effects of AI-driven automation, the threat of tariffs from the United States, ongoing global conflicts and the growing cost of living.
With economic uncertainty now a defining feature of everyday life for many Canadians, the sense of financial precarity is shaping how people think, plan and spend.
Addressing this new reality will require equipping ourselves with tools and mental habits that can help develop financial stability, even in unpredictable times. Here are three research-backed ways to do this.
1. Budget based on values
With many people feeling the pinch or uncertainty around money, a more deliberate, values-based approach to personal finance is needed beyond traditional budgeting methods. If you’re looking for more control over your finances, it can help to shift your focus from just tracking where your money goes to making sure it goes where you actually want it to.
Research in consumer behaviour supports this shift in mindset. Mental accounting, introduced by economist Richard Thaler, explains how people naturally divide their money into mental categories like stability, family or learning. Budgeting then becomes less about cutting back and more about making intentional choices.
Studies have found that pairing this kind of values-based budgeting with simple practices, such as setting clear goals and automating transfers, can lead to lower spending and more consistent long-term behaviour. The goal is not to manage every dollar perfectly, but to make sure your money aligns with what matters most to you.
Since values tend to guide sustainable decision-making, a practical starting point is to identify three to five core values, such as financial security, personal development or time with family. Next, review your recent transactions and group them by the value they support. This reframes budgeting as a way to assess whether your current spending aligns with what you consider most important.
From there, assign a reasonable monthly amount to each category based on your income and fixed obligations. You don’t need to track every detail, but having value-based benchmarks will improve day-to-day choices.
Renaming categories in your budgeting app or spreadsheet is another important approach. For example, changing “discretionary” to “family time” or “well-being” can reinforce the link between spending and values. Set up automated transfers that reflect your goals; this might include creating a savings buffer, funding education or contributing to a low-risk investment account. Automation helps reduce decision fatigue and supports consistency.
2. Use pessimism to your advantage
While recognizing economic risks is entirely rational, how people respond to that risk makes a significant difference. Psychologists have studied a mindset known as “defensive pessimism,” a strategy that involves anticipating potential problems in order to plan effectively, rather than being overwhelmed by uncertainty.
Unlike chronic anxiety or fear, which can impair decision-making and lead to poorer financial and consumption choices, defensive pessimism encourages people to take a more measured, thoughtful approach. It combines realism with preparation and helps individuals stay focused and responsive in uncertain conditions.
People are more resilient when they focus on what can be changed. In practical terms, this might include learning a new skill, starting a side project or strengthening personal or professional networks.
To apply defensive pessimism, start by clearly identifying what could go wrong, then outline specific actions to address those possibilities. Break big tasks into smaller, manageable steps, create a backup plan and regularly reassess progress. This approach helps maintain focus, reduce surprises and turn worry into preparation.
These small, proactive steps with detailed personal reflection can offer a sense of agency that counters feelings of helplessness. Rather than ignoring challenges, defensive pessimism coupled with consistent reflection is about figuring out how to work around them.
3. Adopt a long-term outlook
Despite ongoing uncertainty, maintaining a long-term financial perspective remains very important. Research consistently shows that people who engage in long-term planning tend to accumulate greater wealth over time.
Long-term planning involves continuing to plan for future goals such as retirement or education, even when timelines need to shift due to changing circumstances.
One of the greatest challenges with this approach is known as the “sour grape effect.” This refers to the tendency people have to downplay a future goal or reward after experiencing early setbacks or failures.
A 2020 study with 1,304 participants in Norway and the U.S. found that setbacks can lead individuals to disengage from their goals. Participants were given either positive or negative feedback on an initial task and then asked to predict how much happiness they would feel if they succeeded in a later round.
Those who experienced failure anticipated much less happiness from future success. When everyone actually did succeed, their levels of happiness were the same regardless of initial feedback. Setbacks can lead people to devalue their goals as a self-protective strategy. However, participants with high achievement motivation did not show this bias.
In other words, when short-term disappointments are interpreted as failure, there is a risk that people may give up on long-term plans altogether. In these moments, the most effective course of action is staying consistent and committed, while still remaining agile enough to adapt as needed.

3 ways Canadians can take control of their finances in an age of economic uncertainty

July 16, 2025 • My Project Name

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