If there is any time when understanding your budget is vital, it is when you experience job loss. Making a Budget Work with Job Loss may seem impossible, but it really is the best time to enforce that budget guideline. Below are some tips that have been used in the past when job loss has affected others.
Making a Budget Work with Job Loss
First, you must understand what a budget actually is for your family. I have shared about why you need a budget in the past but will review the basics for you before we get into how to make one work with job loss.
As mentioned in the above-linked post, budgeting is all about holding yourself accountable. By seeing your income and expenses all lined up in one place, you can quickly notice places you are overspending. As a result, you are more aware of your habits, and can readily make changes to help your overall finances. A budget is, very simply, a list of income and expenses for each month.
Evaluate your current checking and savings accounts
When you lose a job, the first thing to do is look at what you currently have on hand monetarily. This money may be the last income you have for a period of time. If this is the case, then you want to know exactly what you have, and how far it will go. Some employers will give a severance package that you can figure into this number. Just be aware of how much your former employer owes you and how much time they have to pay out. Some states and workforce laws vary on the time those wages can be held after someone is laid off or let go from a job.
Our 52 Week Savings Plan is a great way to create an emergency fund or savings for times like this.
Create a list of your absolute must pay items
So, you have lost your job, and the panic hits. This is definitely understandable and expected. The first thing to do is sit down and make an accurate and up to date list of all of your monthly bills. Break this down into those items that must be paid, and those that are optional (entertainment, subscriptions, etc.).
Once you have your list in hand, you can determine how far your current checking and savings accounts will go to keep you afloat. For many families, this won’t last long. If you have good savings and emergency funds in place, you may have a few months of expenses covered.
The must pay items are the ones you need to make your priority on the budget. Nobody wants to let payments go for any reason, but if your funds are limited, there are some things you will want to cancel and stop buying to make your money stretch as far as possible.
Use this list to contact those who will suspend payments
One thing a budget helps with is to see all of your bills and creditors in one easy location. In a case where you have job loss, this is vital for the big picture. Using this list and budget, you can take the time to start calling anyone who will be willing to suspend an account or cancel an account to save you money.
Most credit card companies will suspend your account for a short time period. You may even have been paying for insurance on your cards that will take over payments during a short period of unemployment. Sit down with pen and paper and start calling. Knowing what is currently expected as payment can also help you to ask for negotiation on a lower monthly payment that will fit into your income for a time.
Apply for unemployment insurance
Each pay period you pay a set amount in for unemployment insurance. Individual states have different laws regarding who is eligible to receive this compensation with job loss, so you will have to look at your local area workforce center for more information. It is important to apply, even if you are not eligible to receive assistance. Having this on record will help you to not only find other job offers but may be required if you are to apply for government assistance of other kinds.
Once you complete the application, you will know pretty soon how much weekly assistance you will be paid. If you qualify, you can then sit down and restructure your current budget with the new monthly projected income and figure what still needs to be canceled, suspended, or covered in another way.
Apply for government assistance
Nobody wants to rely on government assistance. However, it is there for such a time as this. If your income suddenly drops due to job loss, you may be eligible for a multitude of benefits for your family. Most importantly, is the SNAP program that provides food for your family. Take a look at your state requirements, and apply as soon as you find out about your job loss. This can help you meet one of your largest budgetary needs until you get back on your feet.
To make SNAP funds go even further, make sure to check out our tips for Meal Planning Ideas for help make your meals simple and inexpensive. Take advantage of our resources to stretch your food budget as far as possible during tough times.
Break down your list into tasks to accomplish
One of the easiest ways to make a budget work with job loss is to break it down even more. Instead of the full month to month picture, start breaking down your budget by what is needed each week throughout the month. This gives you a starting place for creating income.
If you see that week one you need $700, you can then look at ways to make that $700. Perhaps you can look around your home and sell items you no longer need. Price them in ways that build up to $700. The next week you may need just $300 for bills. You can go through again and try to sell items, or figure out a part-time job like being wait staff at a local restaurant that would create $300 in tips for that week.
Make a budget work no matter the situation
While you may have landed here due to job loss, you will soon realize how a budget is a must no matter the situation. Knowing what is going and coming from your accounts each month is the only way you can truly know where you stand financially. This spurs you on to ask for a raise, look for a better job, or create a side hustle income that will allow more flexibility in your spending habits.