As the first in a new series of financial literacy sessions at the Moose Jaw Public Library, chartered professional accountant Juanita Pandya presented a strategy and some advice for those trying to bounce back after a loss of employment.
The Library has partnered with CPA Canada to host these informational sessions, which means all of the advice offered comes straight from certified accountants.
Pandya began her presentation by offering what she feels is the most important thing to remember following a job loss.
“Losing your job is an emotional thing,” said Pandya. “It's a harsh time in your life, but you can make it the most exciting time in your life by looking at your skills, looking at who you are as a person and what you want to do and accomplish for your future.”
The first step following a job loss is to come to terms with being unemployed. Next, in order to make it through the next few months, begin constructing a budget.
It’s important to know exactly how much expenses are each month, in order to make a plan to cover those expenses until another source of income is secured. Determine your fixed expenses — things like car payments, rent or mortgage payments, utility bills, taxes, and loans.
Fixed expenses are things that are necessary for you to cover, creating the base for your budget. Then, spend some time considering variable expenses, like unexpected medical needs, weekly groceries, or car repairs.
Once you have a budget outlined, it’s time to begin looking at your debts and assets. The first step is to find out how much you will receive from Employment Insurance, and then to consider how you can supplement that amount to cover your budget.
EI will offer benefits depending on the period of your last employment and other ongoing conditions. They can supplement up to 55 per cent of your insurable weekly earnings, up to a maximum of $562 per week.
Pandya also suggested looking into pulling out RRSPs or tax-free savings accounts, digging into emergency savings, or even borrowing money on a life insurance policy if you’ve had it long enough.
She also noted that while creating a budget is a good idea, it only helps if you are able to actually follow through with it. About 70 per cent of Canadians admit they have a budget in their head, and only 37 per cent follow that budget.
The next step is to deal with any debt you have incurred. Talking to a debt counselor is the best course of action, and many even do free consultations to discuss your options. Debt is normal, with nearly 80 per cent of Canadians living with credit card debt that is unmanageable.
She also dispelled a common myth about bankruptcy as well, saying that declaring bankruptcy will not result in losing your house or car, as those are considered necessities.
While you are doing all of this, you should also be thinking about finding a new source of income. For some, that means preparing a resume and cover letter and beginning the search.
For others, it could mean some career considerations, such as whether you should seek more education or whether you should consider contracting your skills as a small business. Pandya suggested seeking career counseling if you have more questions than answers.
Pandya also suggested that people should look into preparing for this situation as well, for the future. Having emergency supports that would last about six months is a good idea because when sudden unemployment happens, it is a tough time to navigate.
“You don't have a plan, and emotionally, you don't have time to think about a plan,” said Pandya. “[The key is] to just ask for help. There's nothing wrong with that.”