Financial Advice If You’ve Just Lost Your Job
Avoid Panic By Creating A Plan
By Mark Swartz
Monster Contributing Writer
Nearly 60% of Canadian families live paycheck to paycheck. With little financial buffer, It can be a devastating blow to get downsized.
But the immediate impact of job loss may not affect your income much. It’s likely you qualify for some severance pay if you’d been working in the same place for several years or more. A measure of vacation pay may be due as well.
So there’s probably no need for panic right after getting terminated. Instead, you can take a close look at your personal and family finances. The focus is on preparing a budget that gives you enough time to look for a suitable new job.
Investigate All Your Employer Entitlements
Before you even sit down to plan a revised budget, make sure you take advantage of all benefits and entitlements available to you.
In terms of your employer, be certain to look after any severance pay details quickly. Normally you are given a short period of time to “sign off” on the severance offer. If you think you deserve more, promptly consult an employment lawyer for advice.
Are there any outstanding entitlements coming to you? Unused vacation pay and expense reimbursement are fairly standard. Your employer may also arrange for continuation of medical/dental benefits, an education allowance, and job search counseling.
See What’s Available From Government Programs
Other entitlements you may be eligible for are from various levels of government. Apply for Employment Insurance as soon as possible. The process may take weeks. Don’t wait for your Record of Employment if your most recent employer delays in sending it out.
There may other government funding available. Certain provinces offer retraining programs if you need to make a career change or upgrade your skills. There’s also free language classes, and assistance with your resume and job search.
Prepare A Budget For The Duration Of Your Job Search
The basis for your financial plan starts with estimating how much you’ll spend during the time you’re unemployed. Be fiscally conservative: try to give yourself the longest period possible in which to job search. Getting caught short when you’re so close to getting a job offer could cause unnecessary stress.
According to financial advisory firm BDO Canada, “If you don’t know what you currently spend, track household expenses for one month by keeping receipts and writing down all of the bills you pay and everything you and your family members spend – even the smallest purchases like coffee or snacks. At the end of the month, group expenses into categories and total each category.”
Now review your financial projection and discuss with your spouse and children the differences between needs (such as groceries) and wants (such as a winter vacation). There may be some items you’ll need to put on hold until things return to normal. Your family will understand. They want you to succeed in the long run.
Make Sure Your Credit Is In Good Standing
You want to emerge from your period of unemployment with your finances, and credit rating, intact. Which means you’ll have to find ways to pay your bills and not let them fall into arrears.
To keep yourself afloat as time goes by, you may want to consider financial alternatives. For instance, a consolidation loan might be arranged with your financial institution at a much lower interest rate than what credit cards charge. Of course, it’s better to apply for loans and credit cards before you lose your job. But it may not be too late if you do so shortly afterward while your cash flow is still solid.
Adds BDO, “If the shortfall is major, get help from a financial counsellor who can help you gain control of your finances. Professionals can offer you valuable advice regarding a variety of potential solutions such as mortgage refinancing, using part of your RRSP, negotiating with creditors, credit counselling and consumer proposals.”
Budget Some Funds For Your Wellbeing
Cutting back on expenses can buy you extra time in your job search. But along the way you’ll want to reward yourself and your family with occasional incentives. A special evening out together. A weekend getaway instead of the week-long vacation.
If you can hold on to your gym membership, do so. Reducing stress through exercise is a great way to stay healthy. Soon enough you’ll find that new job. Your steady paycheck will resume. And you’ll be ready to get your finances back to normal.