Amid economic uncertainty, people are actively seeking methods to cut costs on a limited budget and exploring additional sources of income to compensate for diminished wages. If the concern of potential job loss weighs heavily on your mind during these challenging circumstances, it is crucial to proactively prepare for such an eventuality. By taking proactive measures at present, you can alleviate stress and enhance your financial resilience.

It’s often the case that people are unaware of the impending loss of their employment. The announcement of such news is typically unexpected and unwelcome. However, it’s reassuring to know that there are several proactive measures one can undertake immediately to ready themselves for potential layoffs or a significant decrease in working hours.

1. Revise and streamline your budget

In the event of a job loss and the absence of a monthly household budget, it’s crucial to create one immediately. Furthermore, if your current budget was formulated based on your previous income, it’s essential to thoroughly assess your expenses in light of your new circumstances. Take proactive measures to reduce your spending. There are apps like MoolahMate that can help you manage all of your finances in one place. Consider the following suggestions to save money on a tight budget:

• Opt for online TV streaming and cancel cable subscriptions. Streaming services such as Disney+, Amazon Prime Video, Hulu, and Netflix offer more cost-effective alternatives.
• Increase the deductibles on your car and home insurance policies to lower your monthly premiums.
• Cancel any subscriptions you may have, including magazines, streaming services, or subscription boxes. Utilize platforms like Rocket Money to identify any forgotten subscriptions that you are still paying for.
• Conserve energy by keeping the air conditioning turned off or the heat turned down, resulting in savings on utility bills.
• Switch off lights when not in use to reduce electricity expenses.
• If you are concerned about being unable to afford essential services like electricity, internet, gas, or water during this period of uncertainty, reach out to your service provider and explain your situation.

2. Develop your emergency savings

If you haven’t established an emergency fund yet, it’s time to start building one by depositing cash into a high-yield savings account. In case you already have one, ensure that it contains enough funds to cover your family’s expenses for a period of three to six months. Any amount you manage to save from your current budget should be directed straight into your emergency fund, if feasible.

Considering the significant changes brought about by the end of the pandemic, it’s likely that your lifestyle has begun to return to normal, and you are starting to engage in many of the activities you used to enjoy. Although it may be stressful or frustrating to give up these activities or purchases, these adjustments present an opportunity to further strengthen your emergency fund. Take a moment to reflect on these things and allocate the funds toward your emergency fund. For instance:

• Going out for drinks with colleagues in the evening
• Dining out at restaurants
• Attending concerts or sporting events
• Taking vacations
• Shopping for clothing
• Purchasing a latte before work

For instance, if you are currently working from home, you no longer need to spend money on gas for your daily commute. Begin saving the money you would typically spend on gas each week and direct it into your emergency fund. Alternatively, if you used to spend $25 per week on eating out for lunch with colleagues, allocate that amount towards your emergency fund.

3. Pay off debt

Paying off debt should be a priority, especially if you have high-interest debt. There are various ways to tackle credit card debt quickly. Consider paying off your existing debt or transferring it to a credit card with a lower APR. If you’re still employed, look for ways to increase your income and allocate the extra money towards paying down your debt.

Alternatively, you can reach out to your credit card company and explain your situation. Some lenders are offering temporary hardship concessions, such as allowing interest-only payments, waiving interest payments altogether, or suspending payments for a specific period.

If you own a home and have good credit, it’s advisable to apply for a home equity line of credit before losing your job. Obtaining one becomes challenging or even impossible once you’re unemployed. While you don’t have to use the funds immediately, having a home equity line of credit provides cash that can be used to pay off high-interest credit cards or cover essential expenses like groceries.

According to the Government of Canada website, using a home equity line of credit to pay off credit card debt can significantly reduce your interest payments. However, it’s crucial to carefully consider the pros and cons, as defaulting on payments could put your home at risk. Some credit cards currently offer long-term 0% APR options, and transferring your debt to these cards can save you a substantial amount in interest. Just ensure that the 0% interest rate is valid for at least 12 months or longer before proceeding with this option.

4. Obtain a postponement on or renegotiate your mortgage

Numerous people feel apprehensive about fulfilling their rent or home loan obligations when faced with a layoff or a decrease in working hours. If you have been laid off or are facing a reduction in working hours that makes it difficult for you to meet your monthly payments, it’s important to contact your lender and inform them about your current situation. By doing so, you may be eligible for a mortgage deferral. This entails the temporary suspension of mortgage payments during exceptional circumstances. Additionally, now might be an opportune moment to consider refinancing your mortgage, especially if the current interest rates are lower than what you are currently paying.

5. Apply for unemployment benefits

When faced with job loss, it’s crucial to promptly apply for unemployment benefits. It’s important to note that each province operates its own unemployment program, meaning there is no universal approach. To gain more information about unemployment benefits, you can easily reach out to your provincial employment insurance bureau, such as Employment Ontario. The application process can be completed online or over the phone. To save time, ensure that you have all the necessary documentation organized beforehand.

The required information may vary by province but typically includes your Social Insurance Number, personal details like address and telephone number, your bank’s address and routing number, as well as your checking account number. Additionally, you will need to provide your employer’s name, address, and phone number, along with the exact dates of your employment and copies of recent pay stubs. If you have received emails from your boss or corporate heads regarding layoffs or reduced hours, it’s advisable to include them as well.

Freelancers and contract workers usually do not qualify for unemployment benefits. However, it’s still worth applying as some provinces are revising their policies to include them.

6. Analyze your cellphone usage

Cell phones are an essential expense for most individuals, as they are necessary for job hunting and staying connected with loved ones. Luckily, there are numerous methods to cut down on your cellphone expenses.

One approach to save money is by switching to a prepaid cellphone plan, which can potentially save you $30 or more per month. To maximize your savings, consider referring to Business Insider‘s analysis of the best low-cost cellphone plans available in Canada.

Additionally, it is crucial to assess your data usage. If you frequently incur data overage fees, it may be worthwhile to increase your data limits to avoid these costly charges. However, if you are open to using Wi-Fi instead of cellular data for web browsing, reducing your data limits can effectively lower your monthly bill.

7. Start networking, if you haven’t already

Everyone’s situation is different. Numerous people will update their resume and actively seek a new job promptly. Alternatively, some may opt to temporarily become stay-at-home parents or enhance their career skills during the quarantine period. Regardless of your chosen path, you should leverage your network of friends and colleagues, particularly when embarking on a job search. Utilize platforms like Facebook and your LinkedIn profile for professional networking, as they can serve as invaluable resources for discovering fresh opportunities.

8. Discover additional revenue streams

In light of the current economic slowdown, various industries are experiencing reduced hiring and even layoffs in certain companies. Nevertheless, there are still companies actively recruiting and opportunities available to explore new sources of income. One approach is to consider a complete career switch. Venture into recession-proof industries such as medicine, law enforcement, or senior care. Surprisingly, even sectors that are not typically seen as recession-proof are also seeking new hires. Another strategy involves seeking work-from-home jobs or side gigs that not only ensure your safety but also enable you to earn money. In-demand side gigs may include online tutoring, corporate cleaning services, or providing food delivery services through platforms like DoorDash, catering to older adults or individuals who are unable to leave their homes.

A final word

Losing or departing from your job can be an extremely anxiety-inducing ordeal, regardless of the thorough preparations you may have made. Moreover, in light of the prevailing economic outlook, numerous people across Canada are encountering this tumultuous circumstance. Rest assured, these suggestions are designed to assist you in maintaining stability.