Even though it was years ago, I remember the collision of thoughts and feelings when I heard the words ‘we don’t have a position for you after maternity leave’. I was on the receiving end of restructuring. I found out a couple weeks before I was supposed to return to work. Wow.
I don’t remember the order of what thoughts popped into my head but here are some of them:
- We have a mortgage to pay
- I’ve committed to a second child care spot
- I’ve paid for a child care spot for our eldest during my second maternity leave to hold our current spot and earn sibling priority placement for our youngest – a lot of money paid and a lot of money to pay
- What are we going to do?
Never mind all the other questions and issues to work out, my priority was crunching some numbers to figure out how to deal with this massive curve ball!
Whether you are a single or double income household, any disruption to income is a big deal. The bulk of your financial obligations don’t change in this scenario but it’s important to find out what you can adjust to best meet any reduced income.
How much income will be coming in and at what points might it change further (i.e. Will you receive a severance package, how much will you receive and for how long? Will you qualify for Employment Insurance (EI), how much will you receive and for how long?). I found it easiest to put the information on a timeline.
Note your minimum required monthly obligations cutting out any extras (i.e. cleaner, gardener, pedicures, manicures), savings and cut back on any accelerated debt payments and reduce discretionary spending to the absolute minimum. Consider what you must maintain even though you’re not working right now – reliable child care is so important to parents and impossible to replace if you give up your spot so we chose to continue with this ‘investment’ knowing that we would need it as soon as I found a new job. Others may choose to give up their child care and figure out an alternative when needed – given the amount of the expense, this may not be a choice for many. Don’t forget to consider any large, annual expenses such as property taxes, car insurance, holiday season and vacations.
Do the math – compare the expenses to the income at the different milestone points on your timeline. Does the income cover the expenses? If not, where else can you adjust? Give yourself some brainstorming time – it’s amazing how resourceful you can be. If income is greater than your minimum expenses – perhaps thanks to a nice severance package, calculate the monthly difference (excess). If you set this aside each month, it will be there for you when/if it runs out before you’ve found another job – at least to tide you over and cover your minimum expenses a little longer.
Note your Plan B for if/when the time comes that you need to cut further and what that will mean (i.e. no longer insuring or running your vehicle, selling assets) and mark this on your timeline. Severance and EI all run out at some point.
Other tips include:
- Make sure you have medical coverage
- Get going on any paperwork to apply for EI or any other programs
- Review your insurance coverage and determine if you must find alternative coverage for insurance such as life, disability (short and long term) and dental
This happens to lots of people and some people have to deal with it more than once. Most Canadians do not have an emergency or contingency fund and so, some quick number crunching and planning is the best way to arrest the anxiety and stress that comes with this lousy life event.