How to budget when you’re unemployed

Experiencing sudden job loss or facing prolonged unemployment can cause a lot of anxiety, especially when it comes to managing household finances and meeting essential expenses. The recent MNP Debt Index highlights the financial situation of many Albertans with “nearly half reporting that they are only $200 away or less from being unable to cover all their bills and debt repayments.”[1] This means that many rely on their monthly employment income just to get by.

When you find yourself out of employment and unable to make ends meet, there are several steps you can take to navigate the situation.

Find a job

Search for job opportunities around you. Treat your job search like it’s your primary occupation by devoting time and effort to it. Also, keep in mind that this period of unemployment is temporary – this will help you stay motivated as you pursue new opportunities.

Create a budget

List all your current and potential sources of income, such as Employment Insurance (EI), Canada Child Benefit (CCB), Climate Action Incentive Payment (CAIP), GST/HST, and any layoff packages you may have received. Once you’ve created a list of your income sources, create a budget that outlines your fixed expenses (these are essential items you cannot change). They include:

1. Housing expenses, including utilities
2. Food
3. Vehicle payments
4. Insurance

Cut unnecessary expenses

Once you’ve determined your fixed expenses, review your fluctuating monthly expenses for areas where you can cut costs during this period:

1. Consider cancelling or suspending some of your subscription or streaming services;
2. Review the cost of childcare and find alternatives;
3. Cut back on entertainment and dining out;
4. Minimize extra debt payments;
5. Evaluate your food budget and explore less expensive alternatives; and
6. Reduce gas and parking expenses by using public transportation.

Next steps

Now that you have a clear picture of your monthly living expenses, you can determine whether your current income is enough to cover these expenses. If not, consider taking short-term gig jobs while you continue to search for more stable employment. Gig jobs, such as ride sharing or food delivery services, can provide a temporary source of income while you wait for a full-time job. You can use your emergency fund if your income still falls short and you’ve exhausted all possible measures. Dip into your savings only after cutting out all unnecessary expenses and allocate the funds to cover any shortfall in your budget.

Another option for raising funds is to consider selling some of your household items, such as furniture, on online platforms such as Kijiji or Marketplace. This allows you to declutter and turn unused items into extra cash.

Relying on credit to supplement income is mostly unadvisable but you may need to resort to this option considering the high cost of living. It should, however, be done with caution. If you must use credit, make sure you go for options with the lowest interest rates such as a line of credit. Avoid high-interest credit cards or short-terms loans like payday loans, which carry interest rates as high as 442 percent.

Seek professional help

In the event of prolonged unemployment, it is beneficial to seek professional guidance. Speak to an Insolvency Professional at MNP who can help you restructure your budget and explore options to manage or eliminate debt payments so you can focus on your expenses and job search.

MNP offers Free Confidential Consultation with no obligation to file. You will work with a local team who understand the boom-and-bust nature of Alberta’s job market and the challenges faced by individuals in these times.