Published in: Banks | Aug. 11, 2019
3 Money Moves to Make When You Lose Your Job
By: Maurie Backman
Losing a job can be a blow to your ego, so don’t let it be a blow to your finances, too.
There are a number of different reasons why you might lose your job due to no fault of your own. If your company encounters financial difficulties, it may be forced to let some of its staff go. Or, you might get a new management team that decides to change things up by eliminating certain positions, yours included.
Finding yourself out of work can be challenging from a mental and emotional standpoint, but it can also wreak havoc on your finances. If you’ve lost your job, be sure to tackle the following money moves immediately.
1. Assess your savings
If you were smart enough to build up a substantial emergency fund, you’ll have more options following the loss of a job. But before you start raiding your savings account, see what your balance looks like, and figure out how many months of living expenses it can buy. If you have enough cash to cover the next six months, you may be able to focus on a full-time job search without having to scrounge up a quick part-time gig in the interim. But if you only have a month’s worth of living costs on hand, you may want to get any old temporary job as soon as possible, and hold it down while you look for a more permanent role.
2. File for unemployment benefits
If you weren’t fired for cause (meaning, you’re not to blame for the loss of your job), then you may be eligible for unemployment benefits, and the sooner you file for them, the sooner you’ll have a little extra money coming your way. Your unemployment benefits won’t replace your paycheck in full. In many cases, it won’t even replace half of it. The amount will depend on how much you earned and what state you live in, but the important thing is that those benefits will pay you something.
It can take a few weeks for unemployment benefits to kick in, so if you don’t have any savings in the interim, you’ll need some means of paying the bills. Unfortunately, you may have to resort to charging expenses on a credit card and paying off your balance after the fact. That said, if you know you’re entitled to unemployment and will have money coming in soon enough, you might try to borrow some cash from someone you’re close to and repay it shortly afterward.
3. Unload expenses you aren't locked into
When you’re without an income, the last thing you want to do is spend money on nonessentials -- especially if your emergency fund isn’t particularly robust and your unemployment benefits aren’t all that generous. To this end, go through your expenses and get rid of the ones you aren’t committed to.
For example, you can’t just walk out on your apartment lease and stop paying rent, and you can’t get rid of your car if you need it to get to job interviews (or to function in general). But you can cancel your gym membership if it’s a month-to-month contract, and you can also possibly get rid of your streaming services and cable temporarily. Furthermore, while you most certainly need a cellphone, you might manage to downgrade to a less expensive plan -- say, one with less data attached to it.
Losing a job is a harsh blow on multiple levels. If you suddenly find yourself out of work, take steps to protect yourself financially. That way, you’ll have one less stressful thing to worry about.
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