WHEN YOU NEED A FEW DAYS OFF FROM WORK WITHOUT PAY THAT LOSS OF INCOME CAN CAUSE FINANCIAL STRAIN ON YOUR BUDGET.
Lost income can happen when you catch the flu and must call in sick to work. This means you’ll be short money on your next pay cheque and won’t earn as much money as you expect to. Most employers won’t cover your wages if you are off for a few days to a week and even ask for a doctor’s note which may cost you upwards of $50 out of your own pocket.
Work benefits for short-term might not kick in until after a specific time away from the job.It’s best to know what’s covered and what you need to cover yourself. If you opt out of paying into your work benefits program it’s best to make sure that you are covered somehow, somewhere ahead of time.
Rely on no one but yourself!
The best income protection is your own because you don’t have to fight anyone for that nor do you have to wait to get the cash you need. Any time an employee has to deal with insurance companies they know they are in for red tape and the ride of their life if things don’t go as planned.
What would happen if you couldn’t go to work tomorrow because you became ill, a work accident happened or you were seriously injured?
If you can’t financially survive a week, month or even months without worry then you need better planning strategies. Whether you get hurt in a car accident, at work or outside of work you must prepare that you might not get any income replacement from your employer and if you do it might take time to arrive.
You might rely on a line of credit, credit cards or even consider cashing in money from your registered retirement savings plan to help pay the bills. Although in the short-term it fixes the problem you still have to pay the money back.
I received an email from a blog reader concerned about her husband who fell ill and wasn’t able to return to work for 3 days. It’s flu season and let’s face it, we are all susceptible to getting ill and in most cases that means staying home from work.
Getting your work mates ill won’t make for a very productive environment and when you are ill the last place you want to be is at work. During those 3 days he has lost income due to missing 36 hours of just under $1000/net. He has a shortened work-week also known as condensed work week which means he works 3 twelve-hour shifts.
Although they applied for short-term disability through the insurance coverage offered by the employer for one week of lost pay it might take time for the paperwork process. In the meantime they are struggling to keep the bills paid. The good part is that they have one month mortgage forgiveness and the utility companies have all been made aware that payment may arrive late. You’ll still have to pay the interest charges or late fees but if you have no cash there’s not much you can do but pay what you can and let them know.
Our reader wants to know what they can do to prepare for this situation better in case something should happen again. What options do they currently have until money starts coming in? I’ve already answered her questions via email but she knows I’m expanding our conversation here today on the blog.
Let’s talk specifically today about missing short-term time at work and losing income because of it. This might mean you miss a week or two or even a few days. I’m not specifically looking at long-term today to focus on the fan question.
Hiring a lawyer
The last thing you want happen while fighting insurance companies or disability income services from any of the sources below is having to hire a personal injury lawyer. A lawyer is costly but in many cases where lost-income is not replaced or taking longer than it should you may just have to go the court system route.
Personal injury claims can take months if not years in the court system but for some of you this might be all you have to rely on. Workers compensation claims may happen fast or take years and years of fighting in which case a lawyer may help speed up the process.
If you’ve only lost a couple of days work but it will impact your finances greatly hiring a lawyer will likely cost you more than what you will lose at work. Even though the underlying reason makes sense sometimes you have to ask yourself, is it worth it?
Preparing for lost income
Nobody wants to think that something will happen to their health that will stop them from going to work. A cold isn’t a big deal? The flu will run its course, hopefully. I broke my finger and it will heal quick.
Nah, it’s not a big deal or is it?
Can your finances survive a week off from work?
Losing a $1000 like our reader’s husband can take its toll on anyone especially if they aren’t prepared for such situations. The hardest thing about making money is saving money and so many of us put lost income and job loss on the back-burner. It’s easier to forget about getting ill or laid off where lost income either isn’t replaced or takes months or even years to be paid in full.
Where will the money come to replace your short-term lost income?
There isn’t much I have left about having an emergency savings fund on this blog over the years that will make this any more colourful. You must have some form of emergency savings tucked away that you can peck away at in the event something should happen. This is your personal insurance that no one can touch but you.
Related: Emergency Savings How much and Why?
If your bank account is empty and you are too sick to work the easiest way to source cash might be to borrow money from friends and family. Don’t be upset if they say no because not everyone has spare cash to dish out. They also might not trust you to pay them back even if you are family or a close friend.
If you want to help someone out in need for cash don’t expect the money back and you’ll survive handing over your hard-earned money. Don’t look at it as being taken advantage of consider it a blessing that you can help, with-in reason of course. You don’t need to go broke or take out a second mortgage on your house to spread some financial love.
If you do choose to go this route and borrow money you should pay back what you’ve been given in a reasonable time frame.
Vacation Time/Sick Days
If you don’t have any work benefits or haven’t signed up for them you might want to talk to your Human Resources department if you have vacation days or sick days. Likely if your employer doesn’t have benefits they won’t offer you sick days however vacation time or vacation pay is must.
Talk to your employer to see if you can use your vacation days while you are off sick so you don’t lose any income. Some employers may have no issue with doing this especially if they run a tight ship and business is busy. This way they get you to use your vacation days up and you will have little to no lost income depending on how long you are ill vs. how many vacation days you have.
If your employer offers you sick days you’re lucky. Make use of them when you are sick instead of using them for fake sick days. Some employers offer a payout if you don’t use your sick days as well which is a better option to me rather than wasting them or lying.
Lost Income Replacement
Not everyone has benefits that cover short-term illness or they are self-employed with no income protection insurance or benefits for that matter. Talk to your insurance company to see if they offer lost income replacement insurance that you can pay into. Find out the process involved and ask how much the average monthly cost is for this benefit before you make your decision.
Critical illness insurance is another insurance product that is popular in the event you won’t return after a short-term absence due to illness or injury that falls with-in the guidelines of the policy.
Sources of Income
Having additional income from more than one source is what I like to call a “Smart Strategy” that is like back-up insurance for yourself . Many personal finance bloggers that I know earn income with their blog while working full-time. This is a great source of extra income in the event something should happen or if planning to become a full-time blogger is part of their employment strategy. Even then once you do this backing up the back-up is highly recommended especially when you have irregular income.
Some freelance writers end up blogging full-time and earning ridiculous amounts of money like Michelle at Making Sense of Cents who earned just shy of a million dollars in 2016.
Whether you become a freelance writer, start a blog, or have other sources of liquid income they may benefit you in the event something should happen. Keep in mind if you need to be well to run a side-hustle then you may not have that option if you are bed-bound. Finding a side-income that pays you while you are sleeping is your best bet but again this strategy takes time. Look what Michelle has done in just 5 short years.
Canada Pension Plan Disability Benefit
Going this route may signify that you will not return to work because of disability. Finding out if you qualify is better than not looking into the option at all.
Canada Pension Plan (CPP) provides disability benefits to people who have made enough contributions to the CPP and who are disabled and cannot work at any job on a regular basis. Benefits may also be available to their dependent children.
Benefits for a child under 25
The Canada Pension Plan (CPP) children’s benefits provide monthly payments to the dependent children of disabled or deceased CPP contributors.
The child must be either:
- under age 18
- between the ages of 18 and 25 and in full-time attendance at a recognized school or university.
There are two types of Canada Pension Plan (CPP) children’s benefits:
A disabled contributor’s child benefit for the child of a person receiving a CPP disability benefit – a monthly payment for a natural or adopted child or a child who is in the care and custody of the person receiving a CPP disability benefit.
A surviving child’s benefit for the child of a deceased contributor – a monthly payment for a natural or adopted child or a child who was in the care and custody of the contributor at the time of death. For the benefit to be paid, the deceased contributor must have made sufficient contributions to the CPP.
A maximum of two benefits can be paid to a child.
Employment Insurance Sickness Benefit
This option is one that you must look into especially if you don’t have any other sources of income while you are unable to work due to sickness or injury.
The Employment Insurance (EI) program offers temporary financial assistance to unemployed workers. This assistance includes providing sickness benefits to people unable to work because of sickness, injury, or quarantine.
If you cannot work because of sickness, injury or quarantine, but you would otherwise be available to work, you could be eligible to receive up to a maximum of 15 weeks of EI sickness benefits.
Never say no unless you’re covered with your partner/spouse’s benefits or you’re single. Even then consider that adding your benefits to your spouses will lower expenses if neither of you are covered 100%. Always chose the best benefit package between the two of your or both pay in to get maximum and beyond benefits.
If your employer offers you long-term and short-term disability pay into them as part of your package or make sure you are covered somewhere else.
Receiving insurance benefit for lost income may take a while without a 100% full wage recovery unless you work for the employer of the year. Believe it or not my wife worked for such employer and they even paid for her cell phone and home internet. I know…sweet deal. It may cost a bit but worth it in the long-run if something were to happen even if for the short-term.
You haven’t lived until you understand and experience the struggles of those in need.
Overall, your choices are to either prepare yourself for financial struggle due to short-term lost income or rely on a system that could take its sweet time to pay out the money owed to you.
How do you prepare in advance for lost income if you must step away from your job?
My week in review
So, it’s the start of 2017 and CBB will be 5 years old in a couple of weeks. Exciting to have you along for the ride.
This week went fairly quick but when you work 6 days a week they tend to blend together. I’m not working as much as I did last year so it’s nice to be home more to be with the family and to get some stuff done around the house. While I still can’t tackle any major renovations at this time we’re doing some planning and working on getting our Legal Will finalized.
We made progress this week cleaning out our son’s room and purging all of his toys. So far we’ve made $50 back and plan to keep on selling what we can so we can move on to clothing. I counted about 40 boxes of clothes in the basement that we need to go through. We are keeping what we need just in case we have another baby and getting rid of the rest.
We’ve already donated lots for free and plan to pass anything on that doesn’t sell or that we got for free initially. The money we make back will go towards decorating our sons room.
I managed to get my closet and drawers completely cleaned out and donated everything to a family in our city. It’s such a nice feeling to only have a few pieces of clothing that I know will be enough for me. Too much can be overwhelming especially if you don’t have the space to house it all.
How was your week?
CBB Published Posts
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Top Post This Week: 11 Habits To Help You Budget Better in The New Year
- 3 Advantages To Starting A Monthly Net Worth Calculation: Our December 2016 Net Worth Update
- How To Curb The Fast Food Temptation After Grocery Shopping
- Quick Bacon Cauliflower Rice Stuffed Peppers (Low Carb)
Making a difference (MAD) 2017
Welcome to the 2017 Making A Difference series! Join the networking movement of Personal Finance Bloggers around the world. If you are a personal finance blogger and would like your blog to be featured simply drop me an email.
I’m currently booking for January/February 2017.
There is no MAD feature this week, sorry. I’m working on bookings now. Please help spread the word to your favourite finance bloggers. Thanks.
Weekly fan brag
If you have a brag that you want to share email me at firstname.lastname@example.org with a photo and small write-up of your deal. It can be anything you saved money on that you are excited about.
If your story gets featured you get two ballots in the yearly draw for a PC Financial Gift Card and at least one ballot for emailing me your entry. Either way, you get a ballot in the draw.
The Milk Queen strikes again Lol. I managed to purchase $20 worth of milk and whipping cream for $3.96. Woo hoo! The trick is to watch the expiry dates and delivery days.
These dairy products still had a best before date of the 15th of January. Since it was skim milk I mix with a 2 litre of whole and make 6 litres.
Once complete I freeze it with a pinch of salt to extend shelf life. The cream I made into butter today and froze that too. – Colleen K.
CBB Finance Tip
Even in moments of financial despair there is always going to be someone who will understand what you are going through. Don’t do things alone if you are struggling to make ends meet. Talk to someone, anyone who will listen to you. Ask questions and be proactive with your money. Most of all, never give up.
Top finance post
I read lots of finance posts from all over the world every week and I learn something new from each one of them. This week I stopped by the personal finance blog, The Billfold to read, “How Divorce Changed My Financial Approach To Relationships” because I can relate. I’ve only been married once and in a long-term relationship before that and it wasn’t until that ended that I really knew what I wanted from my next relationship.
My ex-husband did not care that his financial decisions affected me as well.- Billfold
My ex did not care about how much money she spend on her clothes, hair and make-up and near the end of our relationship she was going out with her mates when she could. It was over before it began but sometimes you don’t know what you’ve got until you start reading the book. Even then you might not get a glimpse until the end.
Top frugal recipe
Food is a big part of any budget and a struggle for so many people which is why I’ve created frugal recipes for my family and yours for many years.
I have a second Facebook page called The Free Recipe Depot where I exclusively share recipes from Food Bloggers around the world. Check out the Free Recipe Index on CBB compiled of frugal recipes that are 100% tested and accepted by family and friends!
This week I stopped by Organize Yourself Skinny and Tammy has this wonderful healthy breakfast which is great on the go for adults and kids. Banana Chocolate Chip Baked Oatmeal Cups are healthy and baked in the oven. Simple and easy on the food budget.
Top money-saving DIY
I stumbled across this DIY blog called Elizabeth Joan Designs and found the easiest, frugal DIY decor idea ever, Boxes Into Baskets. If you want those gorgeous baskets for your bathroom but can’t afford the steep price tag, make them yourself. All you need is a box, glue gun and 4ply jute. That’s it. The result is space-saving organized perfection and no one will even know. Elizabeth even has a tutorial for a liner you can make to put into your new basket.
Search term giggles
Always begin and end your day with a SMILE!- Mr.CBB
Every week I get thousands of people visit Canadian Budget Binder because they did a search online and found my blog.
- What criminal offense would make you ineligible for jury duty in Canada– Why? Do you plan on rushing out to commit said offense to get out of jury duty so you can be the one in the prisoners box? Ah, ha.
- Bad MPAC– Is that like Bad Kitty? Bad MPAC, Bad go to the corner!
- Make Money Fast London, Ontario– Now we’re getting city specific I like this.
- Dumpster diving at stores laws Ontario– Here’s the simplified version- Don’t do it!
- Do Christie Thinsations Chips Ahoy expire? – Not a chance. Fresh at day 1 fresh fifty years down the road. You can even leave them in your will to pass down the family line. How’s that for a snazzy inheritance.
- Adult Halloween Costume Ideas– Either you have a thing for Halloween or you’re doing some serious planning ahead. We are in February right? Halloween is in October.
- Smart way to pay off OSAP– Money is optimal but they might accept M&M’s if you ask them nicely.
Most times funny, Sometimes serious.
That’s all the fun for this week, thanks for dropping by and we’ll see ya all again next Saturday!
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- The Saturday Weekend Review #204: Our 2016 Financial Journey Has Come To An En
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