How To Financially Survive Unemployment

How To Financially Survive Unemployment

Surviving Unemployment

Unemployment, an unfortunate reality for many, is an unexpected life event that can turn one’s life upside down. Albeit it’s an unpredictable occurrence, it’s crucial to equip oneself with the knowledge on how to financially survive unemployment. The following guide will provide you with actionable strategies to get through this challenging phase.

1. Proactive Planning

1.1 Establish an Emergency Fund

A wise approach is to prepare for such a situation even before it occurs. Create an Emergency Fund that can cover your expenses for at least six months. This should include only the indispensable expenses and not the luxury ones.

**Note:** An Emergency Fund should be able to cover expenses like rent, groceries, utilities, etc., and not discretionary spending like movie tickets or eating out.

 

2. Adapting to the Situation

2.1 Review your Budget

When you face job loss, revisit your family budget. Make a clear distinction between your needs and wants, fixed and variable expenses. Prioritize the unavoidable expenses.

2.2 Adjustment of Expenses

Try to minimize the necessary expenses. For instance, you can adapt your lifestyle to consume less power and water, thereby reducing utility bills.

2.3 Cash Payments

Perform all necessary transactions in cash to avoid incurring credit card debts.

3. Handling Finances

3.1 Utilizing Severance or Termination Pay

If you receive severance or termination pay, add that amount to your emergency fund. This will help you budget your expenses for the upcoming months.

3.2 Minimizing Debt Payments

Reduce your debt payments to the minimum possible amount. This will help you save a few extra dollars every month without damaging your credit score.

4. Communicating with Creditors

4.1 Contact Credit Card Companies

Reach out to your lenders and explain your situation. They might allow you to suspend payments temporarily or reduce the interest rates.

**Remember:** It’s crucial not to default on any payments, especially to secured creditors, as they have the right to repossess assets.

 

4.2 Exploring Insurance Options

Inquire about any job loss insurance that might be included with your credit card or loan.

5. Seeking External Help

5.1 Applying for Employment Insurance

Contact Service Canada or your local employment office to apply for any available benefits.

5.2 Borrowing from Friends and Family

Consider asking for financial help from your close ones. Ensure that you use the borrowed money wisely and start repaying as soon as you can.

6. Asset Management

6.1 Selling Unneeded Assets

Consider selling assets that are no longer needed. This could include things like old cars, electronics, or furniture.

6.2 Renting Out Space

If you have a spare room in your house, consider renting it out to generate some additional income.

7. Employment Opportunities

7.1 Part-Time or Temporary Job

Consider taking up a part-time or temporary job to cover some expenses. This will still provide flexibility for job hunting and interviewing for full-time positions.

7.2 Networking

Speak with people in your industry. They might know of job openings in their own or other companies.

8. Local Support

8.1 Food Banks

Local food banks can help reduce your monthly expenses. Remember to give back when your situation improves.

9. Investment and Insurance

9.1 Cashing in Investments or Insurance

As a last resort, consider cashing in investments or insurance. Be aware of the potential tax implications of such a decision.

10. Professional Advice

10.1 Consultation

If the suggestions above aren’t sufficient, it might be time to seek professional advice. A licensed trustee office can provide a free consultation and guide you through your options.

Unemployment is indeed a challenging phase of life. However, with the right strategies and a proactive approach, you can successfully navigate through it. Remember, it’s just a phase, and with resilience and determination, you can come out stronger on the other side.

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