Losing your job can hit you like a ton of bricks, especially as you think of all of the financial obligations you have. Having a budget can help you manage your finances to get you through this difficult time.
Key Points
The first thing you should do when you become unemployed is to apply for unemployment benefits, even if you are receiving a severance package. The sooner you apply for benefits, the sooner you will receive them or at least know what your weekly benefit will be for budgeting purposes.
Your budget should change as your finances do, but especially when all or some of your income is decreased or eliminated. It is the best way to ensure that you have more money coming in than you do going out each month.
Calculate your usual expenses as well as any new expenses you may be responsible for now that you’re unemployed. One large expense may be your health insurance as your premiums will no longer be covered or partially covered by your employer. You may be able to continue your coverage for a limited time through the Consolidated Omnibus Budget Reconciliation Act (COBRA), find your own insurance, or apply for Medicaid.
Leave room in your budget for expenses related to your job search including:
Now that your income has decreased or been eliminated, you need to prioritize your spending and cut unnecessary expenses. Cut expenses that you don’t need or can do without while you are unemployed. See if you can lower expenses that you don’t want to give up but are still somewhat expendable.
Make your budget go further by looking into emergency financial assistance. These programs may vary by state so be sure to do your research before applying.
If you are not eligible for unemployment benefits, you will need to cut your budget to the bare minimum until you secure income. In the meantime, use your savings, emergency funds, investments, etc. to cover your bills and other necessary expenses.
Keep all expenses to a minimum while you have no income and don’t be tempted to use your credit cards to cover expenses you can’t afford. Missing credit card payments could land you in deep credit card debt.
If you have no income, you may qualify for more government assistance than those who do. Apply for Medicaid, which is a health insurance for low-income families. Take advantage of all of the government resources for those who are unemployed.
If these programs are not enough to get you through your job search, you may need to get temporary employment to help with your finances. Temporary agencies can often get you to work quickly, though the work can be sporadic. You can also try freelance or part-time positions to allow yourself time to continue your job search.
ClearOne Advantage is here to help you get your unsecured debt under control and explain your debt relief options. Contact one of our Certified Debt Specialists at 866-481-1597 to discuss your best options and get a free savings estimate.