Staying afloat financially after a job loss

Let's face it: losing your job is not easy. Whether you’ve been laid off, put on unpaid leave or had your hours or salary reduced, an unexpected loss of income can be a deeply upsetting experience. If you suddenly find yourself without work, you're probably feeling some combination of grief, anger, sadness and shock. Those feelings are understandable, and it's important that you take care of both your mental health and your financial well-being.

You probably have questions about navigating the uncertainty of what comes next. It's stressful enough to find a new job without worrying about how to handle your finances in the meantime. Take a deep breath. Here, you’ll find practical advice and guidance on budgeting, accessing resources and making sound financial decisions to stay afloat during unemployment.

Hopefully, it comes as some relief to know that you’re not alone. Here in Canada, unemployment benefits and other types of financial assistance are available to help get you through this period. Your former employer will lay out any benefits that the company will provide for you, like extending your group insurance coverage for a period of time, but you also need to look into how government might help.

Employment Insurance (EI) benefits: If you were let go but haven't been able to find a new job yet, Employment Insurance (EI) benefits can provide you with regular benefits up to 55% of your earnings, for up to a maximum of 45 weeks depending on your circumstances. Apply for EI as soon as possible! 

You can apply in three easy steps:

1. Make sure you're eligible: You have to meet certain criteria to get EI benefits, and you have to have lost your job through no fault of your own (for example, due to shortage of work, or seasonal or mass lay-offs). If you're not sure you’re eligible, apply anyway.¹
2. Apply right away: You can apply online and have your benefits directly deposited into your bank account. Don't wait! If you delay in filing your claim for benefit for over four weeks after your last day at work, you could potentially lose your benefits.¹
3. Stay in good standing with EI: To keep receiving your benefits, you have to submit a report to Service Canada every two weeks.² You can complete your reports online or by phone. 

Wage Earner Protection Program (WEPP): If you lost your job because your employer filed for bankruptcy or otherwise still owes you pay, you may be able to get a payment from WEPP. Find out more here.

Wouldn't it be great if you could pause thinking about bills until you find a new job? Job or not, life goes on — and unfortunately, so does the cost of living. And with less money coming in, it's essential to make a practical budget that works for you.

What money do you have coming in? Start your new budget by listing all of the income you do have right now. This includes severance or vacation pay from your former employer, as well as EI or other government benefits. If you have a spouse or partner you share costs with, add in their income, too.

What are your essential expenses? Certain costs are unavoidable, so you have to prioritize and add up fixed expenses that you need to get by on a day-to-day basis. Examples of essential expenses include: 

• Rent or mortgage payments
• Utilities (including water, hydro, internet)
• Insurance premiums
• Vehicle payments and gas
• Food
• Childcare expenses
• Debt payments

Where can you cut unnecessary expenses? It's time to cut down on your costs, so consider reducing non-essential costs by canceling or suspending subscriptions, pausing memberships, cooking meals at home instead of eating out, taking public transportation and adjusting some of your debt payments. When you find that next job, you can reward yourself by resubscribing to your favorite streamer!

Should you dip into your emergency fund? Your emergency fund is there for situations like this, so this may be the time to use some of these savings. Ideally, you would have an emergency fund that can cover three to six months of living expenses. If you've cut down on your expenses and still need a little more money in your budget, the emergency fund is your safety net.

Want some help with your budget? If you’re a Scotia client, Scotia Smart Money by Advice+ can help you with creating and managing your budget.³  It’s a set of money management tools that make it easy to track your bills, monitor spending and manage your cash flow from the convenience of the Scotiabank app. Plus, you'll get personally tailored advice you can use to better manage your money. 

When it comes to debt, it's vital to manage existing debt and avoid adding new debt.

Managing the debt you have: Make a list of your existing loans and debts and tackle them one by one to find out if there are ways to minimize or defer your payments. For example, if you have student loans, you could be eligible for the federal government’s Repayment Assistance Plan. If you’re having financial challenges and can’t make your payments, the government can help you pay toward your loan through the plan. Learn more here.

When you have creditor protection insurance, it can help you pay off your outstanding credit or loan balances or cover payments for a period of time if an unexpected life event happens, such as loss of life, critical illness, disability and  job loss, depending on your coverage. If you have this type of insurance, you might be eligible for a claim, so now is the time to review your insurance coverage and, if it includes job loss protection, reach out to your insurance coverage provider to start the claim process.  If you have job loss insurance protection coverage on your Scotiabank Line of Credit, Scotiabank Mortgage or Scotiabank Credit Card⁴, call 1-855-753-4272, 8 a.m. to 8 p.m. Monday to Friday, or visit us online to start your claim.

You can also consider consolidating your debt by using a consolidation loan to pay off your other debts. It lets you consolidate all your debt payments into a single monthly payment.

Book an appointment with a Scotia advisor to talk through options to tackle your debt.

Avoiding the debt you don't have: Simply put, don't spend what you don't have (if you can avoid it). High interest rates are going to be your worst enemy right now, so work to avoid them as much as you can. That means looking at the loans you have and any you might need to take out, but also cutting down your credit card spend as much as possible. Future you will thank you. 

For the time being, your new job is looking for a job! Maximize all of your resources: Use job search websites, job fairs, government agencies and recruiters, and don't hesitate to reach out to any contacts you made while at your old job. It's time to network!

While you search for your next professional endeavor, don't overlook alternative income sources. Translation: it may be time to get a side hustle. Part-time work, freelancing or the gig economy can help supplement lost income for the time being. It might be something that could turn into your new full-time job, while adding in some financial stability.

Of course, the ultimate goal is to find a job you love and make your period of unemployment as short as possible. It's important to remember this is just that: A temporary period of unemployment. You will make it to the other side.