Consolidated Credit’s tips for unexpected job loss
For some, this may mean a promotion or a growing family. But for others, it could mean an unexpected loss of income or a reduction in rate of pay.
Unfortunately, most Canadians are not financially prepared for that moment when life does happen, leaving them vulnerable to financial hardship and unmanageable debt.
Statistics Canada’s most recent Labour Force numbers might leave Canadians wondering what they would do if they were one of the many workers who faced job loss last month.
According to the June Labour Force Survey:
- The Canadian economy saw a total loss of 6,400 jobs in June;
- As a result, the unemployment rate held steady at 6.8% for the 5th consecutive month;
- The total number of full time jobs increased by 64,000; while
- 71,200 part time jobs were lost.
Jeff Schwartz, executive director of Consolidated Credit Counseling Services of Canada, is encouraged that we did not see an increase in our national unemployment rate. However, he also cautions that all Canadians need to be prepared for an unexpected loss or reduction in income.
“Incomes are constantly changing,” says Schwartz. “Whether it’s job loss, a planned leave, or a reduction in hours, Canadians need to be financially prepared for a change in the amount of money they bring home.”
While Schwartz was pleased with the gains in full time positions, he is still concerned about the number of part-time employees who have experienced a job loss.
“We have to recognize that more that more than 71,000 part time positions were lost this month,” adds Schwartz. “It will be the individuals and families that were not prepared for this loss of income who ended up needing our services. “
“Any loss of income should be a wake-up call for Canadians to get their finances in order and start saving for the unknown.”
Schwartz and the team at Consolidated Credit have helped countless Canadians dig out of debt after a sudden or unexpected loss of income. Here are their tips to help other Canadians avoid the same fate:
Create a survival budget – When you income is reduced or disappears completely, it’s more important than ever to get your finances in order. Sit down with your budget and get a clear picture of your monthly expenses. Creating a survival budget means getting a realistic sense of how long your savings can keep your head above water. If you have been diligent about your savings you should have enough breathing room to search for that next job.
Apply for benefits – Schlepping into the unemployment office can feel embarrassing after a job loss. But don’t forget that you have earned those benefits. Don’t delay your application for Employment Insurance. You have worked hard and paid into EI – these benefits are there to help you get through the rough patch.
Cut back – It sounds simple, but you would be shocked at how many families carry on with the same standard of living after a reduction in income. Take a closer look at your budget and find ways to reduce your expenses. Everything from cable and movie subscriptions to groceries and cell phone minutes can be reduced. Get the whole family involved – use this as an opportunity to teach kids about making responsible spending choices.
Call your creditors – You might be reluctant to inform your creditors that you lost your job, but you would be surprised at how reasonable they can be when you are upfront about your finances. By contacting them before you miss a payment you may find that they are willing to discuss a minimum payment or even a reduction in interest charges.
Plan for the future – While you may not be able to see the forest for the trees right now, it is important to learn from this experience and plan for a more stable financial future. Don’t wait until you land that next job – start creating a savings plan today. Most experts agree that you should save 3-6 months’ worth of living expenses (mortgage, food, transportation and utilities) to cover you in case of sudden loss of income. Create your plan today to avoid financial hardship in the future.
If unemployment has left you drowning in a pile of bills and your creditors are knocking down your door, we can help. Call today to speak to a trained credit counsellor and find out how you can get your budget under control. You can also try our Free Debt Analysis online and a counsellor will reach out to you.