You’ve just been laid off. Maybe you never thought it would happen to you.
It sucks. You may feel angry, scared, embarrassed or completely overwhelmed. Before you panic, take a breath. You don’t have to solve everything today.
There are steps you can take now to lower your stress and help your money last while you look for your next source of income.
Find out how much money you can access
Start by looking at the money you can use without taking on debt:
- Chequing and savings
- Your final paycheque, severance or vacation pay
- Emergency savings or money set aside for other goals
- Your partner’s income
- Investments you could access
If you have an emergency fund. This is exactly what it’s for. Using it now does not mean you failed; it means the fund is doing its job.
Investment withdrawals may have tax and long-term consequences, so consider getting professional advice.
Next, list any credit available, including credit cards, lines of credit or help from family. You don’t need to necessarily use it. At this point, it’s just about knowing what your options are.
Review your spending
Review recent bank and credit card statements and list your expenses, starting with essentials:
- Housing
- Food
- Utilities
- Insurance
- Transportation
- Health costs
Then look for expenses you can reduce now or later, such as subscriptions, dining out, phone plans and planned purchases. You don’t need to cut everything you enjoy. Estimate how long your available money will last so you know when further changes may be needed.
Pause extra debt payments and savings
If you have been paying more than the minimum toward your debt, consider pausing those extra payments. Pay the required minimum for now and keep more cash available for essential expenses.
You may also need to pause regular savings or investment contributions. These changes are temporary. You can begin again when your income becomes stable.
Apply for Employment Insurance
If you lost your job through no fault of your own, such as a layoff, business closure or shortage of work, you may qualify for Employment Insurance regular benefits.
You generally need enough insurable hours. You must also be ready and able to work and be actively looking for another job.
Apply as soon as you stop working, even if you haven’t received your Record of Employment or you received severance pay. Report all payments from your employer when you apply. Service Canada will determine how they affect your claim.
Review your severance offer
Your severance package may include severance pay, termination pay or pay in lieu of notice. You may also be owed vacation pay, commissions or bonuses.
The rules differ across Canada, so check the employment standards for your province or territory. You may be entitled to more than the legal minimum. Don’t feel pressured to sign immediately. Review your employment contract and consider getting legal advice if you are unsure what you are owed.
Contact your lenders
If you are worried about making payments, contact your lenders as soon as possible. It is easier to discuss your options before you fall behind.
A lender may offer:
- A temporary payment reduction
- A payment deferral
- A longer repayment period
- A lower interest rate
- A different payment date
These options are not free. Interest may continue to build, and you may pay more over time. Ask the lender to explain the full cost before agreeing.
Housing, food, utilities, medication and necessary transportation need to come first. Don’t go without groceries to make an unsecured loan or credit card payment.
Consider part-time or temporary work
Part-time or temporary work can help cover essential costs while you continue your job search.
You must report income earned while receiving EI. Benefits are generally reduced by 50 cents for each dollar earned, up to a set limit.
If you receive $550 in EI and earn $300:
- Your EI is reduced by $150.
- You receive $400 in EI.
- Your total weekly income is $700.
Review the Working While on Claim rules, as individual situations vary.
Review your insurance
Ask when your workplace health, dental, disability and life insurance will end and whether you can continue it.
Check whether your mortgage, loans or credit cards include job-loss insurance. Apply promptly and keep making payments until your claim is approved.
Your provincial health coverage will continue.
Borrow with care
Borrowing can cover a temporary shortfall, but don’t use it to maintain a lifestyle you can no longer afford.
A line of credit usually costs less than a credit card. A home equity line of credit may cost even less, but it puts your home at risk. New credit may also be harder to get without employment income.
If you borrow from family or friends, agree on the terms in writing and be realistic about repayment.
Avoid payday loans. They are one of the most expensive ways to borrow and may leave you needing another loan to repay the first one.
Get help if things become serious
Using emergency support is not a failure. Call 211 or visit 211.ca for help with food, housing, utilities and other basic needs. You can also search the federal Benefits Finder or contact a non-profit credit counsellor if your debt is becoming unmanageable.
Make room for free fun
You still need things to look forward to. Having fun does not always have to cost money.
Go for a hike, visit the library, play games with friends, attend a free community event or cook a meal together. Keeping some enjoyment in your life can make a difficult time easier to manage.
Take care of your nervous system
Financial stress can push your body into fight, flight or freeze. When this happens, your brain looks for immediate relief instead of making thoughtful, long-term decisions.
Before making a major financial choice, take a few slow breaths, go for a short walk or talk it through with someone you trust.
Take it one step at a time
A layoff can change your finances quickly, but you don’t need to fix everything at once.
Start by finding out what you have. Protect your essential needs, apply for available benefits and ask for help early. If you’re overwhelmed, contact a non-profit credit counselling agency for support.
