Advice for laid-off workers: Reduce spending, take advantage of severance and apply for EI
By Tara Deschamps
When Addy Bhatia was laid off from Wealthsimple in June, he covered his bills by relying on strategies that got him through four layoffs in the last two years.
First, the Toronto tech worker cancelled an impending trip to India and cut back on shopping. Then, he examined his savings and sold his stocks to avoid market volatility, while he aimed to find a job by the time his severance ended.
“I have a good tech salary, so I haven’t had to worry about money often, but now, it came to worrying about maximizing how much I have in savings,” he said. “I was getting more and more conscious about what my money was doing.”
Bhatia, who found a new job in July, recommends such moves to the thousands of Canadian tech workers from the likes of Shopify, Clearco and Hootsuite that have lost their jobs in recent months as waning investor exuberance and slashed valuations became common.
31,000 jobs lost in July
Though Statistics Canada said the country’s unemployment rate remained at a historic low of 4.9 per cent in July, the economy lost 31,000 jobs that month, marking the second consecutive month of job losses.
Jessica Moorhouse, a financial educator and host of the More Money podcast, said the worst thing you can do for your finances after losing your job is avoid them.
“The first thing that you want to do … is just go under your covers and say `I’ll deal with this later,’ but really the best thing that you should do is put that aside until you have a few key things organized,” she said.
She recommends starting by focusing on any severance your former employer may give you.
Figuring out how much you’re receiving over what period of time is crucial for understanding your new financial means, as is finding out how long your health and dental benefits will last.
Many employers will offer benefits for a few more weeks or months after your last day, so it’s a good idea to take advantage of that while you can, Moorhouse said.
Bhatia echoed Moorhouse’s suggestion and added it’s not just health benefits workers can often access during their severance period. He was able to use accrued education and wellness funds to cover therapy and help with a masters of engineering he plans to pursue.
Moorhouse also advises people who are eligible to apply for employment insurance (EI) as soon as they lose their job because it can take a long time for the government to process.
While people wait for EI and begin their job hunt, she recommends they rethink their financial strategy, so they’re focused on maintaining cash flow and putting aside savings goals, if necessary.
“If continuing my $200 contribution to my RRSP (registered retirement savings plan) means that I don’t have that much to eat or I won’t have enough for rent, put those investments and any other kinds of savings goals … on pause right now,” she said.
It’s also a good time to reduce or cut spending on anything that is nice to have but not essential like streaming services.
“Once you’re gainfully employed, you can resubscribe, but right now we need to live on less, so we can be less stressed about our finances,” she said.
Erin Bury, now CEO of online wills company Willful, used that strategy when she was laid off by a media company in 2013. She had some savings and received severance, but had no emergency fund, so she found ways to cut spending.
“I was a big reader, but I’d love to buy books,” she said. “I remember I got a library card.”
She also shared new expectations to help keep on budget.
“I told my friends, ‘listen, we’re in our mid-twenties, we love going out for drinks and to clubs, but I’m going to be someone that is probably going to ask you to do more affordable things in the next few months because I don’t have a job right now and I’m trying to make this money stretch as far as I can,”’ she said.
While Bury eventually found another job, her layoff reinforced the importance of a budget and helped her reassess her career. She now sees layoffs as a rite of passage most people will face at some point and encourages others to see them as a chance to reset and refocus on your goals.
“It’s something that feels really bad in the moment, but when you look back, it’s often the catalyst or the spark of inspiration that people need to do something differently,” she said.
“It can actually be less stressful, if you reframe it as an opportunity … that propels your career forward.”
Print this page
- Starbucks loses appeal, will rehire 7 fired Memphis workers
- Procedural jockeying during wrongful dismissal litigation backfires for employer