What To Do When You Lose Your Job

by Tax Guy - Burlington Accountant on July 4, 2008 Print This Post Print This Post

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.

Severance Options

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.

Health Benefits

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.

About The Tax Guy...

Dean Paley CGA CFP is a Burlington accountant and financial planner who services individuals and business owners locally, nationally and internationally. Dean has appeared in the National Post, Toronto Star and Metro News.

To find out more, visit Dean's website Dean Paley CGA CFP or connect via Twitter @DeanPaleyCGACFP.

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kugen August 2, 2008 at 9:28 am

i dont know why people have to be in the state of shock when they are sacked!!dont you guys learn history…come on la..12 yrs back global had economic crisis..and 24 yrs back also the same thing happened..36 years back also many lost jobs!!so there is a 12years economic crisis cycle..it happens every 12yrs..so we have to be ready every 12 yrs!!instead of shocked of economic crisis..

Tax Admin August 29, 2008 at 11:02 am

If you have established a financial plan, have an emergency fund, and takes steps to preserve wealth, the impact of a job loss should not cause major financial harship.

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