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Money Advice: What To Do After Getting Laid Off

by:
Paulette Thompson

Some large companies have been making headlines in Canada over the past few weeks—and not the good kind. The head of Bombardier Inc. recently announced plans to restructure its aerospace division due to “inefficiencies”a move that will lay off 3,000 Canadian workers from Quebec and Ontario. In addition, the General Motors plant in Oshawa, Ontario, is also closing its doors, eliminating the jobs of another 3,000 workers as the auto giant sets its sights on the autonomous and electric vehicle market.

While small layoffs happen all the time, mass layoffs by large companies are especially troubling, as one often seems to follow another. And when your job is one of those targeted for elimination, it can seem like the end of the world. So, the first thing you need to do is take a deep breath. You’ll get through this, and having an emergency fund can help!

An emergency fund is exactly what it sounds like—it's money you set aside in case of an emergency, like losing your job. It's recommended you should store away about 3-6 months' worth of your salary, and this must be separate from any other savings you have, like saving up for a down payment, car repair, or vacation funds. If you want to learn more about how to start building an emergency fund, click here. In the meantime, here’s how to develop your layoff survival game plan.

8 Steps to Take Following a Layoff

1. Make Immediate Preparations

Layoffs generally come with a “heads up” from your employer or you may hear something through the grapevine. Most employers give at least two weeks' notice—the same courtesy employees are supposed to extend to their employers when they leave a job. But if no notice is given, an employee is entitled to at least two weeks' pay, on top of a severance package, if they’ve worked at least 12 consecutive months with the employer. (You may want to brush up on your rights regarding terminations, layoffs or dismissals).

You will need to make the most of this money, so as soon as you get the notice or an inkling that one is coming, it’s time to begin saving wherever you can. This could mean looking for discounts, reducing food and entertainment expenses, watching your electric bill, lowering your cell phone plan, or taking public transit to save on gas. Our Budget Calculator can show you areas where you may be able to cut back and how much you could save in doing so. We also recently highlighted a number of apps that can help you save (and earn) money—check out The 10 Best Money-Making Apps of 2018.

2. Seek Out Government Assistance

It’s not that uncommon for people to thumb their nose at government assistance out of a sense of pride. But seeking assistance is nothing to be ashamed of; unemployment due to a layoff is not your fault, and that’s why temporary financial assistance through the Employment Insurance (EI) program and other resources is available to you. There are also resources available to you to further your education rather than jump into another job; you can read more about the Government of Canada’s Skills Boost initiative here.

3. Put Away the Credit Cards

It’s tempting to use credit cards after a layoff to help keep your cash safely tucked away. While this strategy makes sense in theory, it’s ultimately a bad idea because the interest you pay on credit cards quickly adds up, costing you more in the long run. Instead, put the cards away, and only use them if it's absolutely necessary (like an emergency dental bill or vet bill) and all other options have been exhausted.

4. Prioritize Your Bills and Contact Your Creditors

When cash is tight, you need to prioritize which bills are most important. Housing should always come first, so you’ll want to push off an auto loan, credit card, or medical bill rather than your mortgage. But that doesn’t mean you should ignore your other responsibilities. When it comes to credit cards, you should call customer service immediately to inform them of your situation. They may be willing to work with you, lowering your interest rate or moving your payment due date around. Plus, although it is rarely advertised, many creditors have hardship programs, in which minimum payments may be lowered or payment can be deferred for up to six months or a year. (A word of caution though: when that period is up, you often need to pay back the interest accrued in one lump sum.) Student loan payments can often be temporarily lowered or deferred as well.

5. Make a Monthly Household Budget

If you don’t already have a monthly household budget, get one! During a layoff, a household budget becomes a necessity. With little-to-no money coming in and a limited severance package, it’s imperative that you understand where your money goes each month, so you can determine areas where you can cut back. Housing, utilities, and food are a must of course (although the latter can usually be cut back on), while clothing, salons, gym memberships, dining out and extracurricular lessons for your kids, like piano or ballet, can be (temporarily) eliminated. One expense you should aim to keep? Your internet plan, so you can job search; unless you plan on spending your days at the library, which is always an option.

Not sure where to begin when creating a monthly budget? No worries, we’ve developed a free planner that you can download here.

6. Start Networking

Begin your next job search as soon as you receive notice of the layoff simply by reaching out to those you know. That means family, friends, friends-of-friends, former co-workers, and former bosses. A new survey on LinkedIn reveals that 85 per cent of all jobs are filled through networking, so it’s important to refresh your resume, get out on social media, attend networking events, and join organizations. Do anything you can to let other people know you’re looking for your next opportunity.

7. Sell Some Belongings

If you need a few hundred dollars asap you could sell some old furniture, equipment, and/or electronics you no longer use. Of course it can be difficult to consider parting with some items, but it beats having to dip into an RRSP or other investment in order to get by. To avoid the hassle of holding a garage sale, try selling online on sites like eBayEtsy or Craigslist.

8. Get a Part-Time Job

While the goal is to find full-time employment, it may be necessary to take a part-time job in the meantime to get by. It might not be a glamorous position, but think of it as nothing more than a stepping stone to bigger and better things. You might also consider joining the gig economy, like becoming an Uber driver, dog-walker, house-sitter, or doing some handy work. (Know how to build a fence? Can you do some yard work? Great! Put yourself out there, and spread the word.) Who knows, you may enjoy the art of the side hustle so much that you continue to do it for extra cash after finding another full-time job.

A job layoff isn't your fault, so don’t see it as a failure—they happen all the time. Instead, look at it as an opportunity to find a better position or even a new career path. If your layoff has left your finances in dire straights or you're worried about a potential layoff, you can speak to a certified credit counsellor for free by calling 1.800.267.2272 and booking a counselling session. They will review your situation and discuss your debt relief options. All of our counselling is completely free, confidential and non-judgmental. 

Credit Canada Budget Planner Call to Action

 

Topics: Layoffs, Credit Counselling, Budgeting

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