With more than 10% of Americans unemployed, it goes without saying that millions are in need of financial advice. Managing your money while unemployed is a unique experience. If nothing else, it is much different than the way that you manage your situation when you have a job. Before we go any further, keep this in mind: everybody who is unemployed is in a different position. One person may have no money coming in and no savings and another may be married and have the luxury of relying on another income and an emergency fund until they find a position.
Here are five money management tips for anybody who is newly unemployed:
1. Make finding a new job your full-time job. In other words, do not feel bad for yourself. Instead, put all of your time and effort into finding a new position that will get you back on your feet. This may not be directly related to managing your money, but it is worth mentioning nonetheless. Don’t get into the habit of waking up late and going to bed late. Try to keep the same schedule that you had when you were working. Make a list every day of tasks to complete, jobs to apply to, and contacts/leads to follow that could turn into a position.
2. Cut all non-essentials from your budget. You have to pay for food, shelter, utilities and other similar items. But you do not have to add to your wardrobe, eat out, and spend money at the movies. When money is tight and you only have so much coming in, you should cut out all non-essential purchases. Remember, this does not have to last forever, just until you find another position. Also, don’t pay unsecured debt instead of necessities like food, shelter, and lights. If you are forced to get behind, so be it. Make sure you feed your family first.
3. Take full advantage of what is available to you in terms of unemployment. The moment you lose your job is the moment you should get in touch with your state’s unemployment office. Sure, there is a lot of paperwork to fill out, but in the long run this is something you must do if you want to receive unemployment compensation. You pay into unemployment with each paycheck. You might as well get what is yours if you lose your job.
4. Review your debt and prioritize what needs paid first. While you may be in the habit of paying extra on some debts, such as your mortgage and car payment, this is something you will have to cut back on during your time without a job. Instead, make sure you are spreading your money around and paying each and every bill, if possible.
5. Don’t rely on credit cards to get by. The first thing some people do after being laid off is find out how much available credit they have. This is a short-term solution that you do not want to rely on. It may help you make ends meet for now, but soon enough your debt will pile up and you will find yourself in worse position than when you started. Instead of relying on credit cards you should be looking for ways to get rid of the debt you already have. There are numerous things you can do right away to generate some quick income like selling stuff, delivering pizzas, serving tables, cleaning houses, and doing yardwork for neighbors. It may not be the most glamarous but you’ll be glad you did it when you realize how much of a difference the money is making in your life.
The first six weeks after becoming unemployed are the most difficult. This is the maximum amount of time that it will take for your first check to arrive. If you have an emergency fund, this is the time to use it. Have you ever been unemployed ? If so, we would love to hear first-hand advice on how you managed your money.
(photo credit: aflcio)