After hearing about a job loss or knowing one is coming, you will likely feel like your world is collapsing around you. Yesterday you might have felt safe and secure with a promise of a steady financial future. Today you aren’t quite sure. You might be wondering if you'll be able to afford your mortgage, or if you can still set aside money for your kids’ education or your retirement. If you are facing a job loss, here’s what you can do to make sure you are in a position of power as you face this change.
8 Ways To Prepare For A Job Loss
The stress of losing your job is right up there with divorce and major illness. The stress you are feeling is very real, because money (or lack thereof) is a subject that scares most people. The good news is you can start making changes today that will make whatever financial hardships you face down the road a little more bearable. But don’t wait until the first day you don’t have to go into work to take action. Start now!
The following is a list of things you can do right now to help make losing your job a little less scary and much more manageable.
A budget is part of your job loss survival plan
It’s important to see where you stand now, financially, and where you will stand once you aren’t working. Creating a monthly budget will help you do just that. You can use our free Budget Planner to help you get started. When working through your monthly budget, consider your needs versus wants, as well as some of the Easy Money-Savers at the end of this article.
Cut expenses to make your budget more manageable
Start adjusting your expenses now rather than waiting until you no longer have a regular source of income. Start living as if your income has already decreased. The more prepared you are during this period of employment limbo, the less stress you will feel once the job loss comes into full effect. For example, you can start by reviewing your cellphone and internet plans to see what changes can be made or if you can switch to a cheaper package or provider altogether. You can also cut down on going out for dinner every Friday night if that’s something you’ve been doing for the last few years. Remember, habits can be expensive!
Start a savings fund to depend less on credit and high interest loans
Any savings you’ve created by cutting your expenses should be immediately transferred into a no-fee savings account. You can also consider setting up automatic or automated savings through your bank or credit union. Having a savings fund means you won't have to rely as much on your credit cards, which can save you a lot of money in interest. A savings fund will be your lifeline if any unexpected costs occur.
Stop using credit cards
Your credit cards are not an extension of your income! In fact, using credit cards and other forms of credit can drain your income if you don’t pay off the balances in full each and every month, thanks to the interest charges. Challenge yourself to try to live without credit cards for a while to see what it's like. Remember: You pay to use credit and that increases your monthly expenses, so start learning to live using just cash.
Start paying off debt now to save money in interest
Use your current income to reduce your outstanding debt because when you pay off debt you save on interest, and that will save you more money. Only making the minimum payments on your debt will extend the repayment period, which will cost you more in interest. You can use our Debt Calculator to determine which debt repayment strategy is best for you given your specific situation.
Use Employee Assistance programs offered by your employer
Many employers offer Employee Assistance programs to help their employees transition into new roles and new jobs, or even help them better manage their everyday finances. Some Employee Assistance programs offer budgeting and debt management help, additional training, and/or skills development. Start investigating early on what your current employer offers and how they can support your next steps. After all, knowledge is power.
Find ways to increase your income
There are so many things people can do nowadays to earn extra income while finances are tight. For example, you can sell old furniture you no longer use, as well as children’s toys and electronics. You can also consider getting a side job, like becoming an Uber driver or doing snow removal and/or lawn care. Or you can turn your hobbies into income-generating work, such as wood-working and house painting.
Don’t be afraid to ask for help
As a non-profit credit counselling agency, Credit Canada is here to help you as you prepare for any upcoming financial changes. All of our counselling is free, confidential and non-judgmental. To book a free counselling session with one of our certified credit counsellors, simply call 1.800.267.2272. You can start managing your money now to stay in control.
Easy money-savers you can start doing now!
- Taking coffee with you versus buying it can save you $500 a year.
- Choosing standard coffee over a designer beverages, like lattes, can save you $840 a year.
- Smoking half a pack a day versus a full pack can save you $2,184 a year.
- Doing your own manicures can save you about $240 annually.
- Switching to a no-fee bank account can save you $180 per year.
Contact Credit Canada if you are facing a job loss
Check out our free Budget Calculator to discover more easy money-savers you can do, as well as what your spending habits are really costing you. And please remember Tip #8! You aren’t alone, so you don’t have to struggle on your own. Our certified credit counsellors can help you navigate any upcoming financial challenges you might face, and help you start preparing. We are only a phone call away at 1.800.267.2272. Give us a call!