When the economy takes a turn for the worse—like it has in Canada recently—companies will usually resort to cutting jobs. If you’re ever the victim of a layoff, you might wonder how you’ll be able to make ends meet.
While it’s easy to panic, now might actually be a great time for a financial makeover to reinforce any vulnerabilities in your budget. Here are four different ways to help you manage your money after a job loss:
1. Create a bare-bones budget
The best way to weather tough times is to drastically reduce non-essential spending right now, not later. My husband and I have a bare-bones budget, which is a breakdown of all our essential bills and financial obligations that must be paid no matter what. These include things like rent and groceries, but luxuries like dining out and cable have all been axed. If either of us were to ever lose our jobs, this is the budget we would immediately put into practice. Knowing how much you need to survive lets you be prepared to weather economic storms!
2. Look for investment opportunities for your stock portfolio
It might seem counterintuitive to think about building wealth in a time of scarcity, but a weak economy can be the best time to make some investments in your future. The share price of companies in cyclical industries (like energy and mining companies) have taken a hit in an economic downturn, so now might be the time to add them to your portfolio. It’s not easy to time the market, but it is easy to see when it’s at a low rather than a high! Don’t hesitate to make some long-term plays that will pay off when things turn around.
3. Invest in yourself and your network
If you’re jobless, now might also be a great time to invest in your skills. Going back to school to earn a certificate or degree that will help you become more employable in your field is can be a worthy investment. School can also be a great place to build your professional network. Since obtaining my MBA last year, I’ve helped two friends find jobs in their respective fields. You know what they say: it’s who you know. So get to know more people!
4. Start a business
One of the best ways to protect yourself in a changing economy is to take control of your income. Make a hobby into a business or become a freelancer by picking up flexible side jobs where you make your own hours and can work from home. You might even stumble into a new career!
At the end of the day, little can be done about a job loss than to simply wait for things to turn around—and have the confidence that, eventually, they will.
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Flickr: KMR Photography