Preparing for the loss of a job, and knowing what to do in case you find yourself unemployed, can make a positive difference in how you recover.
The US economy appears to be nearing shaky territory. Current economic instability, due in large part to ongoing inflation concerns, increases the need for vigilance when it comes to preparing for various financial scenarios, including the loss of a job. With US economists predicting a 100% probability of an economic downturn and recession occurring in the US no later than October of 2023, now is the time to plan for situations that would personally affect you most. For many Americans, the loss of a job could increase if companies begin to buckle down and reduce staff, leading to certain instability with their own finances.
Losing a job is one of the most stressful and challenging times in your life. It’s scary and full of uncertainties. Fortunately, there are practical ways to reduce the financial impact of losing a job and help you recover quickly. Check out the following article to learn how to effectively handle a job loss, and consider some of the things you can do now, to prepare just in case.
Revisit Your Budget
Whether you lost your job unexpectedly or you know you’re about to be unemployed, it’s important to reassess your expenses. The earlier you can do this, the better. First, if you haven’t already done so, you can create a new weekly or monthly budget while categorizing bills and other needs, such as groceries and housing. Doing so helps you determine the amount of money you have to allot for every category.
Then, consider cutting back on nice-to-haves, such as your subscription to streaming services and premium instead of free accounts. Minimize takeout and deliveries too, and cook at home more. You may think some of these expenses are small, but if removed, you can save a lot of money, helping you manage your finances after losing a job.
File for Unemployment Benefits
You can also financially survive losing a job by applying for unemployment benefits or unemployment insurance. Every state may have different eligibility requirements and payment amounts. However, several states allow applications at their local unemployment office or online, thus making the process faster and easier for you.
Generally, you can get unemployment benefits for a maximum of 26 weeks. This depends on the state and several other factors. Many states provide an online calculator to give you an overview of the amount of money you can receive and how long it will last.
To qualify, you should also be available for work and looking for a job. Keep a record of the positions you’ve filled in the past as the Department of Employment Services might require you to present this information. Prepare your personal information as well, such as your phone number, email, Social Security number, and bank details.
Utilize Your Emergency Fund (If You Have One)
Ideally, you should have an emergency fund that can cover at least three to six months’ worth of your expenses. This helps you get by during unexpected or unfavorable circumstances, like losing a job. Thus, if you have emergency savings, now’s the time to take advantage of them.
To help make your money last longer, keep it in a high-yield savings account. Instead of the usual brick-and-mortar banks, consider online banks that offer higher returns. If you don’t have an emergency fund, then take this as a reminder and motivation to secure one once you land a full-time job again.
Look for Other Sources of Income
It can take several months before you can find a new full-time job. Thus, to maximize your time and help compensate for the lost income, find part-time work or some gigs that you can explore. These include being an online tutor, barista, writer, work-from-home customer service representative, delivery driver, and more.
You’ll not only get the extra money that can cover your bills but also acquire new skills while looking for a new position. If things go well, your part-time job might even become your full-time job or at least open an opportunity with a new employer. Working part-time also allows you to review your career goals and decide whether you want to change career paths.
Talk to Companies You Owe
Losing a job is already stressful, but things get harder when it comes to your upcoming bills. Talk to your credit card company, and explain your situation. Request suspension of payments or lower interest rates. Fortunately, several credit card companies provide programs that can help financially struggling customers.
When it comes to home mortgages, you can ask about lower monthly payments or a longer repayment period. You might also want to connect with telephone companies and other monthly service providers, so you can explore cheaper plans.
One of the disadvantages of losing a job is losing the health or disability insurance that the company provided. Thus, replacing your health care plan as soon as possible is necessary. This way, if you experience medical emergencies, you still get coverage. Under the federal law Consolidated Omnibus Budget Reconciliation Act (COBRA), you can continue receiving coverage if you have health insurance with your employer. You’ll need to shoulder the monthly premiums for a maximum of 18 months.
You may also get health insurance through the health insurance marketplaces that offer affordable coverage. If you’re 26 years old or below, you can join your parents’ insurance plans. If you’re married, you may also be listed on your spouse’s plan. Assess the differences between your spouse’s plan and your health insurance through COBRA or other health insurance marketplaces, and opt for the relatively cheaper option with great benefits.
Pause Saving for College
Saving for your child’s college education is a way to secure their future. It also brings you pride as a parent. However, when you’re facing job loss, you might want to make adjustments to your college saving plans. Either reduce it by half or temporarily stop, so you’ll have extra money for your major expenses. You might also want to let family members and friends contribute to your child’s college fund instead of material holiday and birthday gifts.
Sell Unused Stuff
Do you have old clothes that you’re not using anymore? How about selling them online to earn extra money for your bills? You may have several other things that are just on display losing value. If you haven’t been using them for a while and will not consider buying them again, sell them to help manage your situation. Besides, the proceeds won’t be taxed and won’t hurt your eligibility for unemployment benefits.
Losing a job is the last thing you’ll want to happen to you, especially during these trying times. However, when you’re put in this situation, you need to be strategic to minimize the financial impact. By revisiting your budget, filing unemployment benefits, talking to credit card companies, selling stuff, and looking for other sources of income while looking for a new, more stable job, you can get back on your feet quickly. Remember that this is only temporary, and better days are yet to come.