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If you’re trying to build wealth, your first six figures in savings is a huge milestone. That’s according to the late billionaire Charlie Munger.
“It’s a b—-, but you gotta do it,” Munger told investors at an annual Berkshire Hathaway meeting two decades ago (1).
“I don’t care what you have to do,” he continued. “If it means walking everywhere and not eating anything that wasn’t purchased with a coupon, find a way to get your hands on $100,000. After that, you can ease off the gas a little bit.”
Munger’s six-figure fixation might seem a bit arbitrary at first, but his reason behind it was actually simple: Six figures are where the real power of compounding is unlocked. Once you cross this critical threshold, your money earns more money at a meaningful scale.
But not everybody agrees. Some financial advice gurus are saying there’s freedom to be had with numbers as low as $20,000.
Financial YouTuber Nischa Shah explains that once you’ve saved just 20 grand, you can begin taking advantage of the power of compound interest in your investments. More importantly, you can stop being driven by fear — and not have to take the first job you’re offered or stay in a role you hate because you lack other options.
“Compound interest is one of the most powerful forces in finance,” she said (2). “And once you hit 20K, you’ll see exactly what it means. Your money doesn’t just sit there anymore. It starts earning returns. And then those returns start earning their own returns.”
In her words, “It’s like planting a tree that grows even more trees for you.”
Either way, whether the magic number is five or six figures, it’s clear the experts agree on one thing: When it comes to investing in your financial future, compound interest is the best friend to your savings.
Here’s why maximizing savings with compound interest unlocks your wealth potential — and what you can do to hit your goal and discover financial freedom.
Munger’s $100,000 benchmark has math on its side. But in reality, most families struggle to set aside six figures as they battle stagnant wages and rapidly rising costs of living.
To put this in perspective, the national savings rate, or amount of disposable income left over after accounts are settled, was just 3.5% in November 2025, which is the latest month that data is available, as of February 2026 (3).
What is more alarming is that 21% of Americans have no emergency savings at all, and 37% say they would struggle to cover an unexpected $400 bill, according to a 2024 survey of 1,192 Americans from Empower (4).
In other words, many families don’t have a safety net.
The dearth of savings is particularly acute for younger Americans. According to 2026 data from Empower, the median net worth of Americans in their 20s is just $6,600, and those numbers only climb to $23,093 for those in their 30s and $68,698 for those in their 40s (5).
That’s much less than Munger’s benchmark.
That’s why it’s important to remember that your personal finances could start changing at a much lower threshold. If you’re young or lack savings, just getting to $20,000 could really help shift your thinking.
A lack of cash available immediately can limit your flexibility. In this situation, your top priority has to be survival, which means you don’t have the opportunity to leave your job in pursuit of a better one, take time off to get educated or take on investments with significant risk.
Simply put, you have little to no wriggle room, and that has real consequences on the way you think and process the world around you.
According to a survey of Vanguard customers, people with no emergency fund spend nearly twice as much time thinking about money issues every week than those with at least $2,000 in in the bank (6).
That’s why a high-yield account like the Wealthfront Cash Account can be a great place to grow your emergency fund, offering both competitive interest rates and easy access to your cash when you need it.
A Wealthfront Cash Account currently offers a base variable APY of 3.30%, and new clients can get a 0.75% boost during their first three months on up to $150,000 for a total APY of 4.05%. That’s 10 times the national deposit rate, according to the FDIC’s January report.
With no minimum balances or account fees, as well as 24/7 withdrawals and free domestic wire transfers, your funds remain accessible at all times. Plus, Wealthfront Cash Account balances of up to $8 million are insured by the FDIC through program banks.
Boosting your savings can certainly fatten your wallet, but they have profound implications for your mental health, too.
The same Vanguard study also found that going from no savings to $2,000 in savings improved financial well-being by 21% (6). Indeed, those who progressed further and saved up three to six months of living expenses in an emergency fund saw another 13% bump in well-being.
Put another way, it’s good for your health to have an emergency fund.
But scraping together an emergency fund might not seem easy at first. American households spent roughly $78,535 per year in 2024, according to the Bureau of Labor Statistics (7). That means a $20,000 emergency fund should cover just over three months of living expenses for the typical family.
Once you hit this benchmark, though, you won’t need to focus as much on surviving and can start focusing on growth and investments instead. You can also start to think about taking some time off work to invest in education or pursue a better-paying job.
The question is, how do you get to that benchmark?
It could be as easy as setting up a budget. A quick daily check-in of your accounts can show you exactly where your money is going — and find new ways you can save.
However, if managing a budget feels overwhelming to you, apps like Rocket Money can simplify the process.
Rocket Money can easily flag recurring subscriptions, upcoming bills and unusual charges by pulling in transactions from all your linked accounts.
This can help you cut unnecessary costs, and then you can manually redirect savings straight into your retirement fund. No spreadsheets, no guesswork, no stress. Small habits like this can make a big difference over time.
Rocket Money’s intuitive app offers a variety of free and premium tools. Free features include subscription tracking, bill reminders and budgeting basics, while premium features — like automated savings, net worth tracking, customizable dashboards and more — make it easier to stay on top of your retirement contributions and overall financial goals.
Once you’ve set up a budget, it’s also worth assessing how you’re spending money. As Munger suggested, you might consider cutting back where you can.
For instance, you might find in your budget that you have monthly expenditures that should be reassessed and trimmed down.
That doesn’t have to mean sinking to an untenable living standard, though.
Most people look to cutting down on subscriptions like Netflix or DoorDash, or going out less. While these are smart options, you could also consider looking to other ways to save on essential expenses, such as reducing your cell phone bill and car insurance.
Sometimes, you have to go shopping around for the best deals.
OfficialCarInsurance.com lets you instantly sort through policies from car insurance providers in your area, including trusted names like Progressive, GEICO and Allstate. With rates as low as $29 per month, you can find coverage that suits your needs and potentially save you hundreds of dollars per year.
To get started, fill in some basic information, and OfficialCarInsurance.com will provide a list of the top insurers in your area within minutes.
Ultimately, even after setting up your savings and reducing expenses, it is always a good idea to keep things in perspective.
After all, for anyone starting from scratch, getting to the $100,000 milestone can offer breathing room — but it can also be such an overwhelming number that you never even start. Although it would be great to have $100,000 invested in growing assets, even $20,000 can unlock noticeable growth.
Here’s why.
The S&P 500 has delivered a compounded annual growth rate of 10% since 1957 (8). Socking away the first $20,000 you don’t need for other savings goals into a low-cost index fund that tracks this index, then adding $1,000 per month, could get you to the $100,000 threshold in just under five years if the market remains at historic, favorable levels.
However, if you were to have sold off your investments in a year like 2022, when the S&P was down nearly 20% year-over-year, you could end up losing a lot of money — investing always carries risk (9).
And that’s why it’s crucial you have a long-term outlook — like Munger and Warren Buffett — when it comes to investing so that you can ride out any stock market volatility.
Speaking of market volatility, it’s also important to diversify your investments so that you aren’t over-indexed in any one stock or market. But finding the right stock picks can be tricky, and top-shelf advisor services often have asset under management (AUM) fees, which are charged as a percentage of the portfolio’s total value.
How it works is simple: When you make a purchase on a linked credit or debit card, Acorns automatically rounds up to the nearest dollar, and the excess is placed into a smart investment portfolio.
Let’s say you purchase a doughnut for $2.30. Before you’re done licking the sugar off your fingers, Acorns will round the amount to $3.00 and invest the 70-cent difference for you. Just $2.50 worth of daily round-ups add up to $900 per year — and that’s before your savings earn money in the market. This could give you the boost you need to reach that $20,000 benchmark.
Plus, if you sign up now and set up a recurring investment of at least $5, you can get a $20 bonus investment.
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The Globe and Mail (1); @nischa (2); Bureau of Economic Analysis (3); Empower (4), (5); Vanguard (6); Bureau of Labor Statistics (7); Business Insider (8); CNBC (9)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
Dragon’s Den cast: Wes Hall, Michele Romanow, Arlene Dickinson, Brian Scudamore and Manjit Minhas.
Who is your money hero?
One of my fellow “dragons,” Wes Hall, who I got to know a little bit this year, during filming. I’m so inspired with how he spends money. He’s very different from me in the sense that he’s got the fancy cars and the big mansion and so on. I drive my Ford pickup truck and I have a modest home. But I’m inspired by how he puts charity first. He takes care of other people before he takes care of himself. He grew up in Jamaica. He didn’t have a lot, but he says, “This is about helping others.” He’s made it, and I think that’s what money is all about.
How do you like to spend your free time?
I love traveling. I love eating. For example, this summer, I went to France with my family. It was just a combination of family, friends, great food, some wine, practicing my French. That ties in everything I love.
My wife and three kids—we were in Paris as a base, we went down to Cap Ferret, which is just south of Bordeaux—a beautiful little peninsula, beach town. We hung out in Lille for a little bit to watch the Olympic basketball. We spent time in Bordeaux and went to some wineries. Paris is such a well-travelled place, so we had dinners with different friends and their families who were in town. I just I love that country.
What’s your first memory about money?
My dad, who’s a liver transplant surgeon, is not an entrepreneur or a business person. But he taught me early on to be purposeful with money. What am I doing with even the cheques I would get from aunts, uncles and grandparents for the holidays? He had me write thank-you notes, which no kid likes to do. I had to tell them how I was using the money they gave me.
My dad really hammered into me to save that money for education. And I did, but it was really ironic, because here I am, a high school dropout, a university dropout. But I valued learning about money from my dad and just being wise with how I spend it and being purposeful.
But one of my early memories was when I saved up my life savings as an eight-year-old and bought a brand-new bike. A couple of days later, I put a big basket on it so I could deliver newspapers more efficiently. I put that prized bike to work. I learned from my dad that money was about investment—a purposeful investment.
There’s also a frugal side of me that thinks, “Do I really need that?” Fancy cars wouldn’t bring me joy. Would I rent a Ferrari for a day on the coast of Italy? Heck, yeah. Would I ever buy one? No. And he got me to think about the value of money and what you can do with it.
If money were no object, what would you be doing right now?
Nothing different. I have the dream job. I am so excited to be a “dragon” and to help inspire others, give some wisdom, shared learnings to the pitchers on Dragon’s Den. I love building and growing my companies. Not to make more money, but to grow opportunities and possibilities for other people, and for the freedom to travel and spend time with family and friends, which I love to do.
A depressed adolescent who was texting their best friend while driving ran a red light and collided with your vehicle. While you were away on vacation, someone broke into your flat and took a lot of your belongings. Your living room was inundated when your washing machine malfunctioned. However, that is the purpose of insurance, and having the appropriate policies in place shields you from financial collapse in the event of the unimaginable. Also, depending on the type of damage you’re dealing with, submitting an insurance claim could help lessen your financial burden.
What Is Insurance Claim
A formal request for reimbursement for repairs and other costs resulting from a policy event (such as a vehicle accident or a home burglary) that is covered by your insurance is made to your insurance company when you file an insurance claim. The insurance company will typically send an insurance adjuster to look into the incident after you’ve filed all the necessary documentation for the car insurance claim process to begin. You will subsequently get a payment for the amount of your losses in the mail if the claim is verified and accepted. The Insurance Information Institute estimates that one in every twenty homeowners who are insured makes a claim each year. Additionally, as more and more people drive, the number of auto insurance claims is growing as well. In 2017, almost 6% of all drivers with collision coverage made a claim. That means that if you haven’t filed a claim yet, you most likely will in the future!
When to File It
Should I file or not file? Maybe you never had to deal with insurance claims, but following an accident, that is the question we should pose. And it depends, is the response. Generally speaking, it’s not worth the bother to file a claim for a very modest payout, if you get one at all, if your damages are less than your deductible or only a few hundred beyond it. So bear in mind to look after some mistakes before buying a new car’s insurance. It’s also critical to keep in mind that your insurance provider may decide to increase your premiums if you file a claim. Yes, even in cases where the weather is beyond your control or the other motorist was at fault. In some cases, there’s even a potential they’ll cancel your policy. Suppose your car hits a tree by accident. Your collision policy has a $1,000 deductible, therefore the cost of fixing your automobile would be $1,200. For a $200 insurance reimbursement and increased insurance rates, is it worth going through the insurance claim process? Most likely not. If so, it would be wiser for you to use your emergency fund, which is intended for just that—to pay for the repairs. You ought to register a claim as soon as you begin to experience financial hardship. Here are three particular situations where you ought to give submitting a claim serious consideration:
Injury
Should an automobile collision occur and injuries occur to you, the other driver, or any passenger in either vehicle, you will automatically need to submit a claim.
Who Is at Fault
There is perhaps some misunderstanding over who is at fault for an incident. The insurance firms for both parties will then be left to resolve the matter.
Big Damage
You may be looking at thousands in damages if your car is totally devastated. Those are some very substantial expenses that you most likely won’t be able to pay. Making a claim makes sense, then.
Since every case is unique, it’s crucial to speak with an agent from your insurance provider or an independent insurance broker to help you assess the benefits and drawbacks of submitting a claim.
How to File It
Let’s imagine that your car was just involved in a severe collision and that the front end is now smashed in like a shattered accordion. Thankfully, you’re not hurt, but it appears that your automobile will most likely be completely destroyed, so you’ll need to make an insurance claim.
What precisely do you do? We appreciate you asking! The following are crucial actions you should take to submit an insurance claim.
Call the Police
Don’t just stand there if there has been serious damage, an accident has resulted in injuries, or a crime has been committed. Get assistance by dialing 911! A police record isn’t required to file an insurance claim, but having one doesn’t harm either.
A police report will include details that will simplify the process of filing an insurance claim as well as a detailed account of what transpired at the crime scene or during the accident.
Information
It’s time to gather information from all persons involved in the collision and record as much information as you can from the scene. Consider it similar to a treasure hunt. Ensure that you receive the following: if at all feasible, include the other driver(s)’ name, address, phone number, and a picture of their driver’s license, policy numbers for insurance, all involved vehicles’ years, make, models, license plate numbers, and images of the mishap taken from many perspectives. Keep all doctor’s notes, hospital bills, and other records you receive for the treatment of your accident-related injuries if you’re harmed and need medical attention.
How about claims from homeowners insurance? Make a list of the goods that were taken or destroyed during a break-in, or take pictures of the damage done to your house. Additionally, save your receipts as evidence of expenditure if you must stay at a hotel while your home is being repaired.
Call Insurance Company
After you and any other accident victims are safe, contact an insurance company representative to find out what more you’ll need to submit a claim. Your agent can provide you with the guidance you require because they are well-versed in the nuances of the claims procedure.
The insurance company may dispatch an insurance adjuster to look into the accident and the damage after you make your claim. Consider an adjuster to be the insurance industry’s man who is saving your day. To determine the true cause of the incident, the insurance adjuster will review all available information during the investigation. The adjuster will recommend to the insurance company the amount of money it should pay for the loss after figuring out what caused the accident.
The Canadian federal government eliminated the accumulation of interest on Canada Student Loans, as of April 1, 2023, but you must still pay any interest accrued before then. Some provinces and territories—Alberta, Saskatchewan, Ontario, Quebec, Nunavut and the Northwest Territories—charge interest on their portion of student loans. The interest rate varies, but it’s typically the prime rate plus a percentage. Ontario, for example, calculates interest at prime rate (currently 7.2%) plus 1%.
2. Build an emergency fund
Once your credit card debt is paid off and you’re on track with repaying your student loans, next on the agenda should be building an emergency fund, which should cover at least three months of living expenses. This will be helpful for situations like getting laid off, a car breakdown, a sudden health condition that doesn’t allow you to work, and so on.
You do have a few options for where to stash your cash, including registered accounts, but in an emergency, you’ll likely want fast and easy access to your money. A high-interest savings account (HISA) pays significantly more interest than a regular savings of chequing bank account, and you can withdraw the funds anytime.
3. Set goals—and set up savings plans to fund them
Once you have a solid debt repayment plan and an emergency fund, you can allocate some funds towards your future financial goals. Maybe you’re adopting a pet, or you’re starting a side hustle and need start-up costs. Maybe you’re aiming to take a big trip or buy a car in the next few years. An automated savings plan—which transfers a set amount to a specific savings account—can help you accomplish this faster. At CIBC, for example, you can set up AutoSave in your bank account to transfer a set amount—say, $100—to a specific savings account each time your paycheque is deposited. (This is what financial experts mean by “paying yourself first”!)
Your monthly contributions may be as small as $20 a week or as high as $100 or more, but the key is that they will add up over time. You want to maximize the interest you earn on it. Remember that compound interest info above? It applies in a positive way, too. You can earn interest on the interest you’ve saved. Check out our compound interest calculator—it may blow your mind to see how savings can grow over 30 years. (Your parents and future financial advisor will be impressed, too.)
Again, a HISA is a good option that pays more interest than a regular bank account. Currently, you can find HISAs with interest rates of 2.5% to 5.75%, which might include limited-time promotional offers* that pay additional interest for a few months to a year. While these rates can change, using a HISA can be a great wealth-building tool in the short term. And if the HISA is held in a TFSA, all the investment income you earn is tax-free.
Boost your savings with a special interest rate when you open your first CIBC eAdvantage Savings Account. Limits apply.
4. Choose your financial advice carefully
Parents and friends all have their own ideas about how best to save—especially if they’ve had success buying real estate or made a lot of money investing in the stock market. While some of their tips might be valid, true, their advice might not apply to your unique financial situation.
The Los Angeles City Council adopted an ordinance Friday that prevents the eviction of tenants who are waiting to receive emergency rental assistance from the city.
The vote came one day after the deadline to pay rent debt accumulated during the COVID-19 pandemic.
More than 3,200 residents have been approved for the United to House L.A. Emergency Renters Assistance Program, which provides up to six months of unpaid rent for accepted applicants. Only 25% of the $30.4 million allocated for rental assistance has been distributed.
That means a significant number of renters who have been promised emergency funds have not yet received their money. Thousands more are waiting to hear if they have been approved for the program, which has received more than 31,000 applications.
Only those who have been approved will receive eviction protection.
Councilmember Eunisses Hernandez, who introduced the motion to draft the ordinance last week, said prevention is essential while fighting homelessness. She wants to stem the eviction-to-homelessness pipeline, she said.
“I don’t see us getting out of this homelessness crisis unless we as a city truly make transformational policy decisions around keeping people in their housing,” she said.
There are not enough funds to assist every United to House L.A. applicant — according to Los Angeles Housing Department data, there were $472 million in claims from applicants, nearly $454 million more than the total available. Applications closed in October.
It will take roughly 120 days from now for all applications to be processed. All applicants approved on or before May 31 will be protected from eviction, according to the draft ordinance the City Council voted to adopt Friday. Renters waiting to hear back will be at risk of eviction until their application is approved.
Eviction protection applies only if the sole reason for eviction is nonpayment of rent.
An earlier version of the motion that led to the ordinance would have protected all renters who applied for emergency funds regardless of their application status. Groups representing property owners raised concerns that this would lead to an indefinite delay of rent payments without the option to evict.
“We’re thankful that the council narrowed it down to a smaller pool of individuals who have been approved,” said Fred Sutton, senior vice president of local public affairs for the California Apartment Assn.
“But there remains the concern that this whole item was really rushed in a manner that isn’t acceptable,” he said.
The City Council motion that prompted the ordinance was introduced Jan. 24 and approved Jan. 26. The ordinance was then drafted and adopted Feb. 2. Hernandez said it was necessary to move fast considering Thursday’s deadline.
Rental arrears from Oct. 1, 2021, to Jan. 31, 2023, were due Thursday, the same day rent increases became allowed for units that fall under the city’s rent stabilization ordinance. Tenants living in rent-stabilized units could see rent increases of up to 4%, or 6% if the landlord pays for gas and electricity.
“Housing is a human right,” Hernandez said. “For the Feb. 1 rent deadline to happen on the same day that rent increases take place, it’s just really sad.”
Amid the challenges renters face, Hernandez said she hopes this ordinance will provide the protection necessary to keep people off the street.
“With just a little bit of help, they will stay in their housing,” she said.
The Orange County Transportation Authority is getting emergency aid to repair train tracks in San Clemente after a landslide that halted service indefinitely between Orange and San Diego counties.
On Thursday, Caltrans issued an emergency declaration as a result of the recent landslide. Passenger train service was stopped between the Laguna Niguel/Mission Viejo and Oceanside stations, which are used by Metrolink and Amtrak passengers.
“The hillside still is moving, which is why passenger rail service hasn’t resumed,” said Scott Johnson, director of communications for Metrolink. He said, however, measures were taken to brace the hillside above the tracks before Thursday’s storm set in.
The emergency declaration allows the OCTA, which owns that section of the rail line, to access up to $10 million in immediate emergency repair funding.
Ahead of this week’s storm, “there was a significant amount of excavation and grading that took place,” Johnson said, “along with efforts to restore an extensive culvert system.”
Workers placed tubes, pipes, ballast and rock as well as tarping to brace for the rain.
Teams were “out there throughout the day Wednesday,” he said. “They do continue to see movement, but no significant debris has fallen onto the track.”
Some freight trains are still allowed to use the track between the hours of 9 p.m. and 3 a.m. but at drastically reduced speeds, he said.
Despite the emergency declaration and impending funding, there is still no timeline as to when passenger rail service will resume.
This isn’t the first time in recent years that the tracks have been closed due to a landslide. A similar incident occurred in April.
Compared to previous years, food prices should stabilize in 2024. However, keeping your kitchen stocked will still keep your grocery bill high. According to Canada’s Food Price Report 2024, overall food prices are expected to increase by 2.5% to 4.5% over the course of next year (whereas food inflation jumped by 4.7% in November 2023). So, if you’re a single adult who spent roughly $375 on food per month this year, you can expect to shell out from $385 to $392 monthly by the end of 2024.
The Food Price Report suggests that you can expect baked goods, vegetables and meats to take a big bite out of your budget. However, you’ll get some relief with canned goods and dried pasta. The good news is that food prices will increase at a more gradual pace than in 2023.
What you can do: Consider meal planning
During the pandemic, I started meal planning as a strategy to deal with grocery costs. It’s been helpful in ensuring that our family stays within our food budget and doesn’t fall into the temptation to order takeout. Meal planning consists of deciding what you will eat for the upcoming week and then adding only the ingredients you need to your grocery list.
Personally, I like to make extra lunch portions when preparing dinner, which helps cut back on costs. Another option is to buy items in bulk when they go on sale and then divvy them up into smaller quantities and store them in the freezer. This works well for sliced fruits, vegetables, meats and seafood.
4. Consumer debt will continue to grow
Gen Z will continue to face financial pressure in 2024, so managing debt will become even more important. Between Q3 2022 and Q3 2023, the average credit card balance in Canada increased by 9%, according to TransUnion Canada. The increase was fueled by an increase in the cost of living and the cost of credit, thanks to higher interest rates. Unless the Bank of Canada starts reducing interest rates and daily living expenses start to come down, it’s likely that debt will continue to grow in 2024.
What you can do: Start a side hustle to pay off debt
To become financially secure, 40% of Gen Z are interested in generating more sources of income, such as starting a side hustle, according to a BMO survey. Considering there’s only so much you can do to cut expenses, you might want to consider growing your income so you can more easily pay down your debt.
Once you have some disposable income, prioritize paying off high-interest debt, such as credit card debt, which can help to squash your debt load. If you’re carrying a monthly balance, call your credit card provider and ask if they can lower the interest rate. If you’re fresh out of school and borrowed money to pay for your studies, it’s a good idea to focus on repaying your student loans.
5. Travel will rebound in spite of high travel costs
Despite rising travel costs, young travellers are eager to escape the daily grind. Many young people would rather spend their hard-earned money on experiences instead of goods. Regardless of being in a tight financial situation, 2024 may be the year many Gen Z make their dream vacations happen.
Let’s back up a bit to explain how we got here. When the COVID-19 lockdowns ended in 2022, financial experts warned that the economy would be due for a contraction. That’s partly because of years of massive spending and borrowing by the federal government and historically low interest rates set by the Bank of Canada (BoC), as well as rapid hiring when the world opened up. And there is good reason to ask about Canada’s employment—persistent inflation means that the BoC has been aggressively hiking interest rates since March 2022, and is willing to risk a recession to do so. Plus, Canadian and international companies have started to shed the jobs they created during the pandemic. Headline-making mass layoffs from X, Meta (Facebook and Instagram) and Alphabet (which owns Google) have shaken up the tech industry, stoking fears that other companies would follow. And several have—so far in 2023, Canadian communications giant Bell has laid off 1,300 workers, Qualcomm will lay off 1,258, Canopy Growth has lost 35% of its staff and Shopify reduced its workforce by 20%.
There’s good news, though. So far, the Canadian job market has proved to be more robust than anyone expected. In July, job vacancies decreased by 28.1% year-over-year to 701,300 (the most recent data available). Employment has increased recently, rising by 0.3% in September, Statistics Canada said in its labour force survey.
Here are some strategies to help you prepare your finances so that you can cope with a job loss—just in case. (Read more on how to prepare for a recession.)
Signs your company may have upcoming layoffs
Often there are warning signs when a company is considering shrinking its workforce. A major one is obviously the economy—in a recession, companies may look for ways to cut costs. What about your place of employment? Have you noticed signs of cost-cutting? Other signs: It keeps missing its earnings targets, its share price is falling, or other companies in the same industry are starting layoffs.
Know your rights when it comes to layoffs
You do have rights if you are laid off. Each province and territory in Canada has its own employment laws governing notice for termination, pay in lieu and other termination processes. Generally speaking, if you are laid off in Canada, your employer must provide you with two weeks’ notice, or two weeks’ severance pay if it fails to give you notice. Some employers provide laid-off employees with a combination of advance notice and severance pay. There are some exceptions to this requirement, when the mandatory notice and pay in lieu of notice do not apply—such as being dismissed for just cause (which is usually serious misconduct), when the layoff is temporary or if the laid-off employee has been working for their employer for less than three months.
This severance pay should cover a couple of weeks or months of living expenses until you can find another job or switch over to employment insurance (EI).
Fiona Martyn, an employment lawyer at Samfiru Tumarkin LLP, an employment and labour law firm in Toronto, recommends taking your severance package to a lawyer for review before signing anything. Even though you signed an employment contract upon being hired, sometimes the termination clauses are unenforceable, as the law may have changed during your tenure. “What [an employment lawyer] can do is help you negotiate a better severance package which reflects factors like your age, length of service and position. Severance packages help to bridge the [financial] gap until you find a new job,” she says.
That’s exactly what Michael did (last name withheld for privacy reasons). Michael, who lives in Toronto, lost his job at a large tech company in 2019. “I saw the writing on the wall from a mile away,” he says. “I started getting my ducks in a row.” He was disappointed with his settlement offer—the company let him go only weeks before his stock options would have vested, so his total compensation package was much lower than he expected.
