Losing your job is always stressful, and it’s even worse if you don’t have an emergency fund. Whether you received a severance package or are eligible for unemployment benefits, you may be wondering how you can get through this tough time and keep your finances intact. For many people, their job is also a big part of their identity, and along with financial concerns, they may also struggle with anxiety and uncertainty about the future.
Despite the uncertainty, there are some things you can do to preserve your finances and your sanity as you navigate a sudden change in income. Coming up with a financial plan that can get you through the crisis is critical, so we’ll discuss some of the best strategies for doing so here.
Check Your Eligibility for Unemployment Benefits
One of the first things you need to do if you’ve recently become unemployed is to research your eligibility for unemployment benefits. No matter where you are in the world, many national and regional governments offer some form of unemployment assistance. Designed to help sustain unemployed people while they look for work, unemployment benefits typically amount to less than your salary or wages, but receiving these funds will help keep you afloat financially.
The amount of unemployment compensation you’re eligible for is typically based on your earnings over a period of time, as determined by the agency administering the funds. When applying, answer all questions as honestly as possible and familiarize yourself with the requirements. If you are approved for unemployment benefits, you will be notified of how much you can expect to receive, when you will receive funds, and how long you can expect to remain eligible for payments.
Communicate with Your Creditors
When it comes to managing your bills during your unemployment, it’s important to keep the lines of communication open with your creditors. Some companies offer more lenient terms or assistance to people who are out of work, but you won’t know the options unless you contact the company and make them aware of your situation. In some cases, it may be possible to defer payments to the end of your loan term. For example, if you have an auto loan with 48 months of payments left, the lender may be willing to move one or more payments to the end of the loan term. This means if your lender is willing to defer two months of payments, your new loan term will now be 50 months. Keep in mind that not all creditors defer payments, but reaching out to them is still a good idea.
Keep Your Career Options Open
Losing your job can be devastating, and your first instinct may be to look for a job similar to the one you lost. While it may be easier to stay in the same field, don’t shun the possibility of shifting gears and trying something different. During your time off, it’s important to evaluate your options and see if there are other opportunities. For some people, it’s possible they may be called back to their old job, but do not count on this happening.
Get started right away looking for new job opportunities. The sooner you get started, the sooner you will be employed again. If there’s a position you always wanted, now may be the perfect time to apply. Find companies you’re interested in working for and see what positions are available. Even if the company isn’t hiring, you can still ask for an informational interview—these interviews are a great way to learn more about a company and establish a relationship with hiring managers. Then, when a position opens up in the future, you may already have your foot in the door.
If you have former colleagues with whom you have built good professional relationships, don’t be afraid to contact them and see if they or anyone in their network is looking for someone with your skills. Tell your friends and family you’re looking for work as well. You never know who will connect you to your next job—it could be anyone, so be sure to market yourself.
Alternately, you may want to use your time off to figure out what you want to do with your career. Perhaps something new and different appeals to you. Take time to think about the characteristics of your ideal job and learn what skills are needed to make a career change. If you have skills you didn’t use in your last job, consider freelancing for extra income and experience while you look for steady work.
For those who have the funds and knowledge, starting a business might be a good idea right now, since you can devote more of your time to it. Even if your funds are limited, research businesses that can be started with minimal capital.
Don’t Skip Budgeting
Budgeting is always important, but it’s even more necessary when you’re unemployed and money is tight. It’s important to understand how much money you have coming in and how much is going out—even if it’s painful to face this reality. Once you add up your expenses and deduct that amount from your income, it will probably be necessary to make some adjustments. If you don’t have enough money to cover your basic expenses, brainstorm ways to make cuts or earn extra income while you search for permanent employment.
Losing your job can be devastating, but remaining positive throughout this time is essential. Remember to be kind to yourself and don’t dwell on what you could have done differently to prevent the situation. Focus on your mental health and use some of this downtime to take care of yourself. Having a clear mind will allow you to come up with good ideas to address your situation and will help you remain optimistic while you plan your next move.