So you have lost your job and you life has suddenly changed. You may be in a state of shock and disbelief, confused or just plain scared of what the future will hold. Despite your feelings, you need to move on as quickly as possible and deal with the hand you’ve been dealt.
The first few months will be the toughest. Along with the personal issues you may have you probably have many questions that you need answers to.
- How will I support myself and my family?
- How do I manage my cash flow?
- What is the best way to deal with my severance package?
- What do I do with my pension benefits?
- Can I claim unemployment insurance benefits?
- What about my health insurance?
You need to take stock of everything and develop a plan to help you though this difficult time.
Get Your Finances in Order
You need to have a clear picture of your net worth: What you own and owe as well as what your monthly obligations will be. Develop a conservative but realistic budget for the next 6 to 12 months. Look at your expenses and see if there are any expenses you can defer or avoid, any payments you can reduce, and anything you can give up in the short term.
If you have established an emergency fund or have other investments, you should be on the right track. If not, you need to consider other options such as your severance package or unemployment insurance to help get you through this time.
If you have a choice you may decide to take you package lump sum so that you can invest you money as quickly as possible. However, since your package is almost always taxable you might want to consider spreading out your payments to delay taxes.
Your retirement plan may be a significant portion of your package. You may need to withdraw the funds and pay the taxes, transfer the funds to a new employer’s plan, leave the funds on you old employer’s plan, or roll-over the funds to an RRSP.
Loss of employment may mean a loss of health benefits. In certain circumstances your former employer may allow you to keep your benefits for a period of time. If not you may need to find a benefit plan for yourself and your family.
Develop a Plan
It is east to become preoccupied with your situation and lose sight of the big picture. Whatever your situation, it is important to consider all of your options and develop a plan that is right for you. Life is unpredictable but a well thought out plan will help reduce anxiety and help identify critical issues that must be addresses now. The plan will provide some certainty in your immediate future.