4 Things to Do When You Return to Work After Lockdown

Back to work after a bout of unemployment? Check these key items off your list.

In April of 2020, the U.S. unemployment rate hit a record-breaking 14.7%. In May, that number dropped slightly to 13.3% -- still pretty high. But thankfully, now that states are easing restrictions and businesses are able to open, some people are returning to the workforce. If you're finally going back to your job after unemployment, here are a few key moves to make.

1. Start rebuilding your emergency fund

Many people who lost jobs due to COVID-19 had to tap into their savings accounts to compensate for missing income. If you did the same, you may now be looking at little to no savings -- so once money starts coming in, you'll need to make a solid effort to save it. Under normal circumstances, it's smart to have three to six months' worth of living expenses on hand in an emergency fund, but because we're still in a recession, aiming for the higher end of that range is ideal. It therefore pays to set up an automatic transfer from your checking account to your savings account so before you get a chance to spend your earnings, you're socking some away to rebuild.

2. Resume your retirement plan contributions

You may have had no choice but to hit pause on your IRA or 401(k) contributions while you were out of work. But once you're gainfully employed and your emergency fund is rebuilt, start transferring money automatically into a retirement plan so you're able to build wealth for the future. If your employer offers a 401(k), fill out a form indicating how much money you'd like to allocate to it, and your payroll department will do the rest. And if you don't have access to a 401(k), find an IRA with an automatic transfer feature so money can filter directly from your checking account into your retirement plan.

3. Start chipping away at debt

You may have accumulated some unhealthy debt, such as a credit card balance, while you were out of work. If that's the case, make an effort to pay it off quickly to minimize the amount of interest you accrue. If you borrowed more affordably -- say, via a personal loan or a home equity loan -- then you may not be paying as much interest, but if you have money left over from your earnings, it still pays to eliminate that debt as rapidly as you can.

4. Make sure your wages support your budget

Unless you've returned to the exact same job with the exact same salary, you may find that some of the expenses you were once able to afford are a stretch. Take a look at your paycheck and make sure it aligns with your budget. If it doesn't, comb through your expenses and find things to cut back on. Another thing to keep in mind is that, because unemployment benefits were boosted by $600 a week under the CARES Act, some people who were laid off earlier this year found themselves earning more money while on unemployment than they did at their jobs. If you fall into that category, you may need to make some spending adjustments.

After a period of unemployment, you may be really eager to get back to work, especially if that means having benefits like health insurance reinstated. Take advantage of your new paycheck by making smart financial decisions, and keep a close eye on your spending as you adjust to what may be a new level of income in what remains an uncertain time.