Handling a Sudden Loss of Income

by Achieva Financial
Oct October 03

Life sometimes throws curveballs and you may find yourself dealing with a sudden loss of income because of job loss, or a medical emergency. By being prepared beforehand, you can help minimize the stress of this difficult time, making it easier to stay financially afloat while you’re dealing with a loss of income.

Have an emergency fund

Having an emergency fund is important when you encounter difficult circumstances, including a loss of income. Having 3 – 6 months’ worth of income put aside for a rainy day will make it easier to cope if you lose your job or are unable to work.

Cut unnecessary expenses

If you’re without an income, look at your budget and make as many cuts as you can. Cancel your cable package, and consider renting movies from your local library in order to save money. Cut your takeout or dining out budget and stick to home cooked meals while you’re unemployed. By cutting out unnecessary expenses, you can put your emergency fund towards the necessities: food, housing, and transportation.

Look for ways to cut back on necessities

Once you’ve cut unnecessary expenses out of your budget, it’s time to look at your necessities. Are you buying name brand products as opposed to store brand items? Buying store brand products is a great way to trim your grocery bill, and usually the items taste just as good as the name brand does.

Take steps to reduce your hydro bill by unplugging items you are not using, ensuring the windows are closed if you’re running the heat or air conditioner, and buying a fan to increase air circulation to reduce your reliance on your air conditioner.

Look at your debt payments

Are you making more than the minimum payment on your mortgage or other debt? This is a great habit to be into, but when dealing with a sudden loss of income consider temporarily cutting back your debt payments to the minimum. Once you’re back on your feet you can increase your payments again.

See if you qualify for Employment Insurance or other supports

Is your sudden loss of income the result of a job loss? If you qualify, apply for EI as soon as possible to prevent delays in receiving any benefits you’re entitled to. If your loss of income is the result of a health challenge, you may have insurance through your work place or personal insurance policy. Look over your insurance policies to see if you qualify for critical illness or short or long-term disability coverage.

 

When dealing with a sudden loss of income, it’s important to try not to panic. Follow the steps outlined above, and seek emotional support from family and friends to help you get through your rough patch.