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job loss

Budgeting and Managing Money After a Job Loss

Losing your job is always tough, especially if it happens unexpectedly. If you suddenly lose your job, you also lose financial security. It’s natural to start to worry about how you will manage your finances, pay your bills, and afford your expenses. For many people, a job loss can also harm their self-esteem and even their entire identity. However, while job losses are hard to deal with for many reasons, there are ways to manage your budget and cope with a job loss. Here are some tips.

Acknowledge your Situation

As mentioned, a job loss can be difficult for many reasons. The situation can even be described as traumatic. It’s not uncommon to be upset, angry, sad, or otherwise down when you lose your job. If you experience negative feelings, take the time to acknowledge them and recognize how you’re feeling. It’s okay to take some time to process the situation.

However, it’s also important not to dwell. Give yourself a few days to think, process the situation, and come up with plans, but stay mindful of your mood. Ask for help from friends, family, or medical professionals if you’re struggling emotionally.

Set a Schedule

It’s easy to let time slip by if you’re not careful. While it may be tempting to stay in bed all day, try to establish a routine. This will have a positive affect on your mental health, which will make it easier for you to focus on budgeting, money management, and applying for jobs.

When it comes to looking for new work, place limits on yourself as well. Specify an amount of time on your daily schedule to work on your resume, search for jobs, and complete applications. Not only will this keep you committed to your job search, but placing limits is helpful for other reasons as well. It’s easy to get overwhelmed by a job hunt, so limiting the time you spend working on it can help prevent this. Giving yourself limited time to look for work will also motivate you to get as much done during that time as you can.

Determine your Eligibility for Employment Benefits

Having an income of any sort following a job loss can be the difference between affording your bills and struggling. To find out if you are eligible for Canadian EI (Employment Insurance) benefits, please visit the Government of Canada’s website.

In general, you may be eligible for EI if:

  • were employed in insurable employment;
  • lost your job through no fault of your own;
  • have been without work and pay for at least seven consecutive days in the last 52 weeks;
  • have worked for the required number of insurable employment hours;
  • are actively looking for work;
  • are able, willing, and ready to work.

If you lost your job or income because of COVID-19, please visit this link to find out which financial resources may be available to you.

Adjust your Budget

When you lose your job or your income, you’ll need to adjust your budget to reduce expenses and hopefully find ways to afford all your necessary costs. The first step is to determine how much money you have available. If you are receiving EI, determine how much you will get and use this as your income. If you received a severance from your employer, you’ll have this money available to help you with expenses as well. The same is true if you put money aside for emergencies. This is the time to use your emergency fund if you have one.

Look at your budget and see where cuts can be made. There are likely many things you were spending money on regularly when you were employed that are no longer reasonable at this point. One expense that many people don’t think to look at is subscriptions. If you’re paying monthly for cable, software, or music or movie streaming services, consider whether these costs are still worth it. Cutting them now will give you the money you need to afford your expenses. You can always get these services back later once you’ve found a job.

Avoid Debt

Be very careful to avoid debt while you’re not working. It’s very easy to overspend when you’re using your credit card for purchases, so this might be a good time to start living on cash instead of paying with credit. Track your spending and make sure you’re sticking to your budget. This will keep you from going into debt and help you afford your necessary expenses while you’re unemployed.