Statistics Canada reported this morning that employment increased by 60,000 jobs in September, leaving the unemployment rate unchanged at 7.1%. This is welcome news in our current economic climate; however, unemployment is still up among students and those 55 years of age and older. Furthermore, with continued economic uncertainty, employment rates are still a cause for concern for many Canadians.
Losing a job is one of life’s most stressful experiences. Job loss can leave you feeling uncertain about what comes next, especially when it comes to finances. The good news is there are practical steps you can take today to help you navigate those choppy waters should they ever arise.
There are particular industries in Ontario that are at higher risk of unemployment. While no one likes to imagine job loss, being prepared can ease the stress if it happens. Here are a few proactive steps that can help build financial resilience.
1. Build an Emergency Fund
Aim to save three to six months’ worth of essential expenses. It may sound daunting, but even small, regular contributions add up. Set up automatic transfers to a separate savings account each payday - out of sight, out of mind.
2. Reduce High-Interest Debt
Paying down high-interest credit cards or loans improves cash flow and gives you more breathing room in tough times. Focus first on the highest-rate debts. Do your future self a favour and eliminate this debt as quickly as possible.
3. Keep Skills and Networks Fresh
Continually updating your skills and maintaining your professional network can make job transitions smoother. Attend workshops, volunteer, or take on small learning projects that build your confidence and marketability.
4. Review Your Insurance Coverage
Sometimes, job loss is a result of an accident or illness that prevents you from doing the job you were hired for. Consider income protection or disability insurance as part of your overall financial plan. It’s easier to secure coverage while you’re employed, and it can offer peace of mind in the future.
5. Work with a Financial Advisor
A financial advisor can help you plan for both expected and unexpected changes. Together, you can create a roadmap for saving, debt management, and long-term security.
What if you find yourself out of work? There are practical steps you can take to steady yourself, protect your wellbeing, and prepare for a brighter financial future. Here’s some advice that can help you regain control and plan for what’s next.
Step 1: Take a Breath and Assess Your Situation
First, allow yourself a moment to process what’s happened. Job loss can be traumatic, and it’s natural to feel a mix of sadness, fear, or disappointment. Once you’ve taken that breath, start with a clear-eyed look at your finances. Gather the details of your income (including severance, vacation pay, and Employment Insurance) and your monthly expenses. Understanding your financial picture is the foundation for making confident decisions.
Step 2: Apply for Employment Insurance (EI)
If you’ve lost your job through no fault of your own, apply for Employment Insurance as soon as possible. It can take a few weeks to process, so it’s best not to delay. You can apply online through Service Canada.
You’ll need:
- Your Record of Employment (ROE) from your employer
- Banking information for direct deposit
- Details about your previous employment
Step 3: Create a Temporary Budget
Now’s the time to move from your “normal” budget to a “lean” or “priority” budget. This means covering essentials first and deferring or reducing non-essential spending where possible.
You might also contact your financial institution or credit card provider to discuss payment deferrals or reduced payment plans if needed. Many organizations, including Kindred, offer support programs for members facing financial hardship.
Include the following in your lean budget:
- Mortgage or rent
- Groceries and household essentials
- Utilities
- Transportation (for job search or interviews)
- Insurance premiums
Be sure to include a small amount for recreation or self-care if you can. Balance is important during stressful times.
Step 4: Protect Your Credit Rating and Savings
If you have debt, continue making at least the minimum payments to protect your credit rating. If you anticipate challenges, reach out early to your lender. A proactive conversation can open doors to flexible solutions.
Avoid dipping into retirement savings like your RRSP unless it’s absolutely necessary. Withdrawing early can trigger taxes and reduce your long-term financial security. Instead, look to your emergency savings or a low-interest line of credit as a short-term bridge.
Step 5: Explore Health and Benefit Coverage
Check whether your health or insurance benefits continue after your employment ends. Some employers provide extended coverage for a period following termination or offer options to convert to an individual plan. If your health benefits do continue for a limited time, ensure that everyone gets to the dentist, eye doctor, etc. before the coverage ends. If not, consider affordable private health insurance options to maintain essential coverage.
Step 6: Seek Support and Stay Connected
Job loss can affect not only your finances but also your sense of identity and community. Reach out to supportive friends, mentors, or professional networks. Take advantage of opportunities for free resume support, interview coaching, and retraining. Remember that your worth isn’t tied to your job title. Take time to rest, reflect, and plan your next chapter.
Financial Checklist for Navigating Job Loss
- Apply for Employment Insurance (EI) immediately
- Review your severance and final pay details
- List essential expenses and create a temporary budget
- Contact your financial institution to discuss payment relief options
- Continue minimum debt payments to protect credit
- Avoid dipping into RRSPs unless absolutely necessary
- Review or extend health and insurance coverage
- Reach out to employment and community support programs
- Network and explore retraining or education options
- Prioritize self-care and emotional wellbeing
You’re Not Alone
Job loss can feel isolating, but it’s something many Canadians experience at some point in their working lives. Taking small, steady steps can make a big difference in protecting your financial wellbeing. Remember that asking for help from trusted and knowledgeable sources is a sign of wisdom, not weakness.
At Kindred, we’re here to walk alongside you with practical guidance and advice, with your best interests at heart. Meet with a Kindred team member at any time to discuss your financial needs.