How To Manage Your Finances After Job Loss
Managing your finances when you have a regular income can still be tough, but as long as you budget properly and don’t rely on borrowing, you should be fine. But what if you lose your job and that income suddenly disappears?
People think that it’s never going to happen to them, because they’re doing well at their job, but even the best employees can lose their job if the company hits hard times. You might also lose your job because of illness or injury, so it can happen to anybody at any time.
When you lose your job, you’re going to be in a very difficult financial position and if you’re not careful, you might end up in a lot of debt for years to come. But if you’re prepared and you know how to manage your money properly, you should be fine. Here’s how to handle your finances if you lose your job.
If you’ve had a financial setback, this article can help.
Contents
Have An Emergency Fund
The first step starts while you’re still in work.
It’s important that you’ve got a buffer to fall back on if you lose your job, which is why it’s so important to have a healthy emergency fund. You need to put some money aside each month to save up for situations like job loss, so you can still cover all of your important expenses.
If you don’t have an emergency fund, you’ll only have your last month’s wages and possibly a severance package to rely on- and that might not last you that long.
Action Steps To Consider
- Create a budget, even if that budget is simply on notebook paper.
- Separate your expenses between fixed and variable, and take a hard look at your variable spending.
- Take steps to cut your variable expenses each month and put the amount you save into a separate savings account.
- Once you accumulate $1,000 for an emergency fund, you consider investing your monthly savings amount in an investment.
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Claim Compensation
If it’s applicable, it’s important that you claim some kind of compensation. For example, if you feel that you were unfairly dismissed, you might be able to make a claim and get a payout from the company.
If you’re out of work because of an injury and you think that somebody else is to blame, you should get in touch with a personal injury lawyer and see whether you have a case. If you can make a compensation claim and get a payout, that money will really help you out while you find another job.
Unemployment Benefits
Depending on your situation, you may qualify for some unemployment assistance of some kind.
If you don’t have much in your emergency fund and you can’t claim any more from elsewhere, this kind of government assistance could really help you out. If you qualify, you could get up to $450 a week, which will help you to cover all of your essential expenses.
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Cut Spending Drastically
You don’t know how long it’s going to be until you can find another job so it’s important that you make your money last as long as possible.
That’s why you need to have a look over your budget and start cutting out the expenses that aren’t really necessary. Things like TV subscriptions, eating out, gym memberships etc. should all be cut out of the budget for now. Once you start working again, you can resume spending as normal but for now, you need to stick to the bare essentials.
If you follow these steps, you’ll be able to manage your finances properly after losing your job, and you won’t have to resort to spending.
Hang in there- you can get back on your feet financially.
Ken Boyd
Author: Cost Accounting for Dummies, Accounting All-In-One for Dummies, The CPA Exam for Dummies and 1,001 Accounting Questions for Dummies
(email) ken@stltest.net
(website and blog) https://www.accountingaccidentally.com/