I Lost My Job. Now What?
Written by Preet Banerjee
Friday, January 18th, 2019
Losing one's job can be an emotional experience, which makes it hard to be financially focused when you really need to be. Here's a quick overview of some of the things to consider at this critical time.
Things to sort out now
- You'll want to see if you qualify for Employment Insurance, and then get the process started right away. You can submit your application and file your Record Of Employment later if your employer doesn't have it readily available.
- If you had a pension plan, Group RRSP, or other savings or investing accounts at work, you'll want to check with your Human Resources contact about any decisions you need to make in order to transfer it out.
- If you had benefits at work, like group life insurance, some policies can be converted into individual insurance policies within a certain period of time. Make sure to check all your options. Converting your group life insurance to an individual plan is one option, but so is getting your own private, individual insurance.
- If you've been offered a severance package, you may want to consider getting an employment lawyer to review it for you if there's anything you don't understand, or just to get a second opinion. While there may be many fine employment lawyers offering free consultations, you may want to budget for an in-depth consultation as well.
Create a short-term action plan to minimize your financial fallout
- With a loss of income, it's likely that you'll have a negative cash flow if you maintain the same level of expenses you've grown accustomed to. It's time to review your budget and acknowledge that you'll need to switch to survival mode. List all your regular monthly expenses and see what can be cut. Remember, these are not permanent cuts, so things like ditching the cable package has to be on the table. Make sure you're aware of any cancellation penalties. And while it might be tempting to cut your insurance premiums, those premiums might fall under the "need" category. You can die with or without a job, but either way, your family still needs that protection.
- Check any existing insurance policies you have that might kick in if you lose your job. Some people have balance protection insurance on their credit cards or mortgages. These policies may cover part or all of your minimum payments for a certain period of time while you're unemployed. Many people don't remember signing up for these insurance policies, so dust off the original account applications, or contact the provider, and check.
- If you need to tap any savings or investments, raid your TFSA before your RRSP (called an RSP at Tangerine), all other things being equal. Withdrawals from your TFSA aren't subject to tax, but RRSP withdrawals are treated like regular income and incur a tax bill over and above any tax withheld when you take the money out.
- If you're like me and have an ever-growing list of "things to put on eBay®," now might be the time to clear it all out to raise some cash for this temporary crunch.
Boost your odds of landing your next gig
- Polish up that resumé. SquawkFox.com has a great series that can help you update or write your resumé.
- Clean up your social media profiles. You may want to comb through your old posts on all your social media channels, because it's a safe bet any potential employer will do exactly that. Clean them up, delete anything questionable, or lock down the privacy settings.
- Do your best to let people know you're looking. While some people feel embarrassed about losing a job, your friends and family value you for who you are, not what job you have. And since many jobs aren't advertised, your social circle will often keep their eyes and ears peeled, but only if they know you're looking. Good luck!
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