We are not, technically, in a recession. But for those who are out of a job right now, we might as well be.

We are in what economists call a “low-fire, low-hire” labour market. Employers aren’t axing jobs left and right as they would be in a true economic downturn. But growth is sluggish, and uncertainty – about anything from tariffs to the war against Iran and the future of energy prices and inflation – is high.

As a result, many companies are in wait-and-see mode and in no mood to hire. For job seekers, it means that there are precious few openings out there. Those who become unemployed might be frozen out of the workforce for some time.

If you are still gainfully employed, now’s the time to stress test your emergency fund. Do you have enough that you would be able to stay afloat if you lost your job in this dreadful labour market?

Here are four tips to help you disaster-proof your finances:

Check how long it typically takes to get another job. Statistics Canada tracks the average duration of unemployment, which is a useful reality check. This page shows that number currently sits at 24 weeks for those 25 and older. The general rule in personal finance is that you should have three to six months worth of living expenses socked away. In this economy, aim for the higher end of that range.

If you’re eligible for EI, see how long your unemployment benefits would last. That depends on the number of hours you’ve worked in the past year and the state of the labour market in your area. The good news is that the government adjusts the maximum duration of benefits based on the local unemployment rate. The higher the local level of joblessness, the longer you can stay on EI. In Toronto, for example, the current maximum is 40 weeks. Here’s the page where you can look up your local maximum.

If you qualify for EI, your emergency fund doesn’t have to do as much heavy lifting. Think of it as funds that help you bridge any gap between your unemployment cheque and what you need to cover your monthly expenses, plus money that can keep you afloat for a few extra weeks once EI runs out.

Consider keeping a separate slush fund for small emergencies. If you’re only saving for six months of routine expenses, chances are your emergency fund won’t actually last that long. Life is full of small, urgent, unexpected events: A trip to the mechanic, a leaky pipe, a surprise vet bill. These won’t stop just because you’re unemployed. To ensure your rainy-day fund lasts as long as you hope, it’s important to build some contingency into it so you can afford to pay for the occasional unplanned costs without dipping into debt or shortening your financial runway.

Set up a line of credit as a financial resource of last resort. If you don’t already have a line of credit, now is the time to set one up. It will allow you to borrow at much lower rates than a credit card. That said, avoid taking on debt while you’re out of a job, if at all possible. Your emergency fund should be the first line of defence.

What’s your strategy for disaster-proofing your finances? Let me know at: ealini@globeandmail.com

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