Managing your money after a job loss
After you have lost a job, whether you were laid off or terminated, staying on budget can be a tough task to accomplish. With the stress of finding a new job in addition to a loss in income, frustration can set in. It is important to set your priorities straight and figure out a plan for your expenses.
Before you do anything else, ensure your employer has issued or will issue your Record of Employment (ROE) to Service Canada so you can claim Employment Insurance (EI). Typically employers will send your ROE directly to the government, which is required for you to first apply for EI. Otherwise, your employer may send you the ROE, which you will need to submit to the government yourself in order to obtain your access code. It is important to contact Service Canada as soon as you are laid off or terminated from a job so your payments are not delayed.
Secondly, log into the Service Canada website to apply for EI, regardless if your ROE has been received by the government or not. Delaying this could delay your EI payments from going through, therefore it is best practice to have this completed as soon as possible so you can budget with your new income.
To start budgeting, create a list of your monthly expenses and ensure you have everything covered. Try to be as accurate as possible. It is better to over estimate your expense if it varies month to month than to underestimate. Documenting this on a spreadsheet will help you organize your expenses and see areas that you could possible save in. Once you have determined your expenses, start budgeting and limiting your spending on things that you don’t necessarily need. With employment insurance, your earnings could be significantly less than what you were earning at your previous job (even at the highest bracket). You will soon recognize that your spending for entertainment or miscellaneous items may have to drastically decline. Sacrificing the things you don’t necessarily need will help you stay on budget and prevent your from getting into debt.
If you able to, putting away a small amount of your earnings into savings will help you pay the income tax you may have to pay for when you file your taxes in the following year. If not, ensure you keep this in mind once you find a new employer so you start saving for the possible income tax owing.
At the end of the day, if your earnings from EI are not enough to cover the bases, contact your bank or lender to see what your options are to mitigate your risks. When you receive your first payment of EI, it will be easier to know how much income you will receive and adjust your budget accordingly.
Good luck on your job hunt!
Exelby & Partners Ltd. has offices in Red Deer and Grande Prairie to serve rural Alberta clients to answer any financial questions you may have. If you are looking for a second opinion about how to manage your money while being unemployed or have any other financial concerns, contact us and we will be happy to assist. We also offer free financial consultations throughout our offices in Alberta for those who need further assistance with credit and debt repair.