The coronavirus pandemic and every life change that came along with it was unexpected to say the least. Cities on lockdown, countries closing their borders and companies laying off employees left, right and centre. If someone tried to explain to you last year what the future would bring, there’s no way you would have believed a word they said. But hey, we’re living it! The unthinkable actually happened.

As a personal finance blogger, I understand the importance of short term savings, long term investments, emergency funds and blah blah blah. Even with all of this knowledge and information, it’s sometimes hard to get my point across to others when I’m always talking about hypotheticals.

Here I am screaming, “you should save 3-6 months of expenses just in the case you lose your job or your car gets broken into or your dog needs surgery!” but no one thinks it’s going to happen to them. And yet here we all are, in it together.

On March 30th, 2020 I got the dreaded email from the CEO of our company outlining our working notices. We would get paid full salary for the next 3 months and if they were unable to cut a deal with a new investor by then, the layoffs would come into effect. Three months to prepare, let’s do this!

In this article, I am sharing what steps I personally took to prepare for my layoff in June of 2020 due to the coronavirus pandemic.

Spending Habits

I’m a big fan of budgeting, tracking your spending, whatever you want to call it. Not only does budgeting help me see where I am spending my money, but it also helps me find extra money to spend on things that I care about. I can predict how much money I’ll need for certain life events coming up and because I’m prepared, I won’t need to feel anxious or stressed when something unexpected comes up. Money can be a stressful topic but it really doesn’t have to be.

Because I am such a budget nerd, I was able to look back at the past six months and take an average of my spending. As it turns out, my average monthly spending is about $900. This $900 is spent anywhere from groceries to eating out with friends, clothes, books, gifts for friends and family, hair products, transit or cabs, anything.

Do I live happily and comfortably spending $900? Yes. Do I need to spend $900 to survive? No.

Looking at my monthly spending, I could realistically spend closer to $600 if I needed to, still spending happily on some wants. I could also drastically decrease that spending to around $200 and say no to absolutely everything for a few months until I get back on my feet. This drastic decrease in spending would be unsustainable for the longterm but definitely doable for a short period. The best thing for me to do is to prepare for the $900 monthly spending but do my best to spend less than that while I remain unemployed.

My situation is quite unique in that I will be starting a professional graduate program in September. I know that I will only have to worry about potentially not having an income for two months, July and August, until I begin receiving student loan payments for September onwards.

Learn more at How To Start Budgeting

Investment Contributions

Since September of 2018, I have been investing roughly 40% of each paycheque within my Tax-Free Savings Accounts (TFSA) for a downpayment and 10% within my Registered Retirement Savings Plan (RRSP) for retirement. For the months of May, June and July, I cut this amount in half and only invested 20% of my income through my TFSA and 5% through my RRSP. The difference was transferred into savings to start preparing for the layoff. The plan is not to invest anything beginning in August.

Savings Contributions

For the past three months, I have been optimizing my savings accounts for future spending. I wanted to focus all of my extra money into fattening up my savings account.

I was able to increase my emergency fund (not to touch unless absolutely necessary) up to $2,500 and my slush fund (extra spending money) up to $1,800. This meant I would have enough money saved to comfortably spend my usual amount of $900 in both July and August with another added buffer for extreme emergencies if needed.

I also bumped up my Christmas/birthdays savings account to $400 in case I was not able to add any more money to this fund for the rest of the year.

Severance

In order to receive one month of pay as a severance package, I had to agree to stay employed right to the end of my working notice, June 30th. With the severance money, I planned to put away $2,500 as a designated emergency fund, and the rest towards other short term savings and spending money.

Severance pay is not a requirement in British Columbia and the rules vary among each province in Canada. After speaking with some of my fellow coworkers, not all received a severance package like I did.

Your back up plan should not be dependent on the severance amount you think you should be receiving. Speak to your HR department, read up on your company’s policies and the rules in your province/state/country. Find those documents you signed on day 1 of the job and make sure you know whether or not you will actually be receiving funding if your employment is suddenly terminated.

Company Benefits

With a layoff also comes the end of company benefits. While I was still employed, I read up on my company’s benefits package to see if there was any medical need I could get taken care of before my last day of employment. Because of the pandemic, I was unable to use up my massage therapy or physiotherapy benefits but maybe I could get some new glasses? Of course our plan didn’t include vision care but it was a nice thought. I struck out on this one but it was worth a shot!

Usually companies will let you buy into the benefits program after you leave for a bargain price. Be sure to do your research and compare the rates for other health insurance companies if you choose to go this route.

Stay Calm

Getting laid off can be scary, traumatic and stressful. I realize that I was extremely lucky to have had the time to mentally and financially prepare for it but even the smallest amount of preparation can go a long way.

Try setting up an emergency fund for yourself along with a plan to execute well before you get the news of a layoff. Laying out a plan before the anxiety and stress takes over is the key to success. Not to be a Debbie Downer but even if you think you have the most secure job of all, anything can happen. It’s better to hope for the best but be prepared for the worst. When you’ve got a plan, you won’t need to make decisions out of fear.

“Failing to prepare is preparing to fail.”

— John Wooden

Disclaimer: I am not a certified financial planner or investment advisor. The ideas posted on this website are my own opinions on how I manage my personal finances. The content is specifically for educational and informational purposes and is not considered professional financial advice. Everyone’s finances work differently and you will have to do your own due diligence before making any financial decisions.

Pin it for later!