How to Restructure Your Budget Following Unemployment
Unemployment is a situation many people will find themselves in at one point or another. While it is common, finding yourself without a job can be distressing. Adjusting to a lack of steady income is often problematic and an overall uncomfortable transition.
It will take changes and a little creativity, but finding yourself between jobs is survivable if you adjust your lifestyle and budget to match your current financial circumstances.
Make Spending Changes
When you find yourself without incoming cash flow, it’s essential that you act fast and make changes to slow down your outgoing cash flow.
- Cancel all unnecessary subscriptions, such as cable, internet, and club memberships.
- Shop wisely at the grocery store. Only purchase what’s necessary and cook all meals at home.
- Avoid buying too many gifts or making impulse purchases.
- Delay clothing purchases or shop second-hand where possible.
- Don’t schedule new activities that will cost money.
These spending changes aren’t going to be fun, and they do indeed take discipline. Remember, however, that these adjustments aren’t forever but are intended to keep you afloat for now.
Apply for Unemployment Benefits
If your unemployment is due to being laid off or fired for reasons other than insubordination, visit your local unemployment office. There, you can apply for unemployment benefits, which can be helpful during your job search.
States vary on how much you can receive in benefits, but if approved, this can be a quick way to bring some temporary income into your household.
Also, check with your previous employer for any severance packages that may be available to you.
Contact Your Creditors
Meeting your credit and loan repayment obligations can be challenging when you’re dealing with job loss. Often, credit and mortgage companies will be willing to work with you if you have a good payment history and if you contact them before any missed payments.
If the creditor is willing to work with you, they can structure a plan in a number of different ways, including deferring payments, lowering your APR, or possibly reducing the amount you owe.
Look for Alternative Ways to Make Money
Every bit counts during unemployment. It can be lucrative for your situation if you look for different ways to make money.
- Pawn unwanted or never worn jewelry
- Hold a garage sale and sell household items you can do without
- Consider driving for a ridesharing company
- Take paid surveys
- Take advantage of any special skills you have by picking up some contract work
- Make and sell something if you’re good with crafts
Tap into Your Emergency Fund
If you previously set aside money in preparation for an emergency, now’s the time to use it. Using your emergency fund is something that you should do sparingly and only for necessities. Do not use your savings to cover things such as dining out, vacations, or impulse purchases.
Apply for Medicaid and Food Assistance
If you’ve been paying for your health insurance and can no longer afford it after your job loss or were receiving coverage through your employer, contact your state's local Medicaid program office and apply for benefits. If you qualify, this will be a little to no-cost option to keep you and your family insured during unemployment.
Programs like food stamps are put in place for the exact purpose of assisting individuals and families who cannot afford them on their own. If you find it difficult to purchase food during unemployment, contact your local Supplemental Nutrition Assistance Program (SNAP) and apply. If approved, this can be a significant relief for your household while you continue your job search.
The Big Picture
When you’re faced with unemployment, it’s a good idea to access helpful resources and manage your finances extra closely. Some budgeting requires the lifestyle changes described above, along with applying for financial assistance to get you through this time. Take the next step in saving money and maintaining financial stability.