A Job Loss, Your Money, And How to Deal
Losing your job can be incredibly difficult to deal with. Almost half of Canadian employees are living paycheque-to-paycheque, the amount of debt held by Canadian households has been rising for about 30 years, and housing continues to get less affordable. Canadians are stretched financially and having trouble coping with costs even during good times. A job loss will certainly exacerbate these issues and leave you struggling to make ends meet. If you don’t watch your finances carefully, you could end up in serious debt troubles if you lose your job.
Finding a new job right away can be tough, especially if you work in a very specific field or lose your job at the same time as many other people. Competition for jobs is fierce and that means it may be awhile before you can find new work. To cope during this time, here is some guidance for how to handle your finances and avoid debt when you lose your job.
If You Think You May Lose Your Job Soon
In some cases, you may have some advance warning that you could be losing your job. Your employer may have already made a round of layoffs, your industry may be struggling, or you might notice that sales are down at your company. Whatever the reason, if you believe that you could be losing your job in the near future, it’s a good idea to start preparing while you still have a regular income.
- Start saving
- This is a time to start putting aside some extra money each paycheque to deal with a potential loss of income. Even if you can only save $25 or $50 each time you get paid, this adds up over time and any amount will help if you find yourself out of work.
- Adjust your budget
- If you reduce your budget now, while you’re still employed, you’ll be able to put more money into your emergency savings account to help you deal with a job loss. This could keep you from getting into debt trouble later on.
- Plus, if you cut back now and learn to live off of a reduced budget, you’ll find it easier to deal with the financial impact of losing your job.
- Be aggressive with debt repayment
- Try to reduce your debts as much as possible. The more you’re able to repay now, the less you’ll have to worry about if you lose your job.
- Start looking for other opportunities
- Finding a new job often takes several months. You might want to get a head start on your job search while you’re still working and receiving an income from your current employer. That way, you’ll be less likely to go through a period where you have no income.
If You Lose Your Job Unexpectedly
You’ve likely seen it on the news, and you may have been unfortunate enough to have it happen to yourself. Job losses can be sudden. Whether it’s the GM plant in Oshawa, the Campbell Soup factory in Toronto, GE in Peterborough, Sears across the country, or any other number of factories, plants, retail stores, offices, and other workplaces, companies can make decisions to close locations with very little notice. This leaves those who work there scrambling to deal with a loss of income and benefits.
If you suddenly lose your job, here are some things to keep in mind.
- Find out if you are eligible for employment benefits
- Government employment insurance (EI) can help replace a portion of your income for a period of time. Find out if you are able to receive these benefits and apply as soon as you can if you are eligible.
- Figure out how long your finances will last
- Try to avoid going into debt while you’re unemployed. To do this, look at how much you have saved, calculate how long this will last, and then create a budget that helps you live within your means.
- Modify your budget
- You’ll likely need to make cuts to your budget to make ends meet. Look at your current spending and see if there are places where you can make cuts.
- Determine if you should make a career change
- If your industry is struggling and there are layoffs at various companies in your field, it could be time to consider a career change. Spruce up your skills and do some research to see if there’s another field with better job opportunities that you’re qualified to work in.
Coping with a Job Loss Financially
One of the first things you’ll need to do if you lose your job is work out how you are going to cut expenses so you can make ends meet. Start by prioritizing the money you spend each month. There are some things you’ll have to learn to live without, so determine which are the most important expenses (usually housing, food, etc.) and which you could cut (entertainment, eating out, etc.) and then make a new budget to match.
You may also wish to contact your creditors. If you have debt and your job loss is making it difficult to afford your monthly payments, call up your creditors and let them know. If you are honest and explain that you lost your job and that lower monthly payments would help you afford your bills, they may be willing to reduce the amount of interest that you are charged or give you more time to repay your debt, which will lower your monthly payment.
Speaking with a licensed insolvency trustee can also be a good decision. A trustee can review your financial situation and give you details on the debt relief options that are available to you. This can be very helpful if you are struggling to make ends meet.
Coping with a Job Loss Emotionally
Losing your job doesn’t just hurt you financially. It also has an affect on you emotionally and mentally. What you do for a living is a big part of your identity. Not only that, but suddenly wondering if you will be able to support yourself and your family can be devastating. Financial insecurity and uncertainty are difficult to deal with, no matter who you are or what your money situation is.
It’s important to realize that these feelings of sadness, grief, and despair are normal. You may wish to take a break to plan your next steps, but be careful not to fall into a negative space where you wind up wallowing in self-pity or sadness.
Talk to friends and family members. Your first instinct may be to try to avoid social situations following a job loss, but leaning on your support network is important during this time.
It’s also important to take care of yourself emotionally and physically. Limit alcohol, nicotine and drug use, eat well, exercise, and try to get enough sleep. Not only will caring for yourself help you stay physically healthy, but it will keep your spirits up. It’s easier to think clearly and make big decisions when you’re healthy, well-rested, and feeling positive.