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How to rebuild your finances after a job layoff
So you got a new job, go you! But now what?
Hi, I’m Renée, a finance and business journalist, writer and content strategist. The Budgette is about single finances and publishes twice a month. I prefer to write when I have something to say versus writing because I have to. It gives me time to speak to financial, legal and other experts.
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A lot of content focuses on how to manage your money after losing your job. You revisit your budget, tap your emergency fund and apply for employment benefits. All the things I talked about in this issue.
But there isn’t a lot of content out there about what to do with your finances after you’ve got a new job.
I’ve been there. I’ve been laid off from media jobs as were many friends and colleagues. I’ve applied for EI, and lived off my emergency fund and line of credit when needed before I started a new job.
I’ve picked up a few things as a result. This is in no particular order and may not apply to your situation.
Use your credit cards if necessary
And pay them off immediately. You don’t want to carry a balance because that’s more money going towards paying off the card that can be used for other things. Plus, should another layoff happen, you won’t have a balance to deal with when you don’t have an income.
Pump up the emergency fund
It took one layoff to hammer home the importance of a robust emergency fund. Now robust is subjective, so you can decide what amount makes you comfortable. For me, it’s four to six months.
Whatever you do, do not put your emergency fund in a GIC or anything product that locks in your money. Also, do not invest your emergency fund. (Do I need to say this? Apparently.)
Pay off the bills with the highest interest first
If you had to use your credit cards to live between jobs and you have debt, try to pay it off as soon as possible. High-interest rates plus a balance means more money spent to pay it off. This is known as the avalanche method.
You continue to pay the minimum on other debt with lower interest rates but focus on paying off the debt with the highest interest rate first, then take that money and put it towards the next highest debt.
Revisit your budget
Especially if your income changed with the new job. Make adjustments to your spending categories. Do you need to add to or subtract from your spending? If your income has increased, where can you put some of that money? Yes, allocate some for treats. Austerity budgets only work for a limited time under specific conditions.
Automate it all
This is a lot to think about while starting a new job, so automate what you can such as credit card payments, savings and your emergency fund.
Employer-matching? Sign up asap
If your company has employer matching contributions for your RRSP or 401(k) and you are eligible, sign up as soon as you can. Don’t wait a year or two. It is extra money in your retirement amount that you do not have to contribute out of your salary.
Don’t make your job your identity
You’ve probably learned this lesson already but no job is forever. Don’t define yourself by your role or your career. I know it’s hard to unpack and relearn this but this article from The Atlantic explains why that kind of definition can be harmful.
Good luck with the new job!
This week’s readings:
I did journalism: The struggle is important: Why throwing too much money at your kids (and parents) can hurt the whole family (Toronto Star)
Patio hangs are spendy but summer is short. Summer spending can be as bad as Christmas. Here are six cash-burning temptations you need to watch out for (Toronto Star)
I’m not surprised. ‘Overlooked and ignored’: This demographic has the highest rate of poverty in the country (Toronto Star)
If you’re wondering what’s going on with Shein and their recent influencer trip, Friday Things breaks it down. (Friday Things)
Me in the future. Thinking about buying a house with friends? Here's what to consider (CBC)
Well, this is deeply irritating. Gender parity 131 years away: WEF (Via LinkedIn)
By the time you’re on your fourth interview and now there’s homework? Yes. Should job applicants be paid for interviews? (CBC)
Did anyone actually get the $25 gift card as a result of the bread price-fixing scandal? New rules on price fixing, wage suppression and employee poaching kick in today (CBC)
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