Many people have lost jobs in the past year. Here's what to do if you're worried about losing yours.
Though the U.S. unemployment rate is substantially lower now than when it reached a record high in April 2020, it's still a lot higher than before the pandemic. While there are reasons to be hopeful that the economy will improve in 2021, especially with the widespread rollout of coronavirus vaccines, we probably still have some rocky months ahead.
If you work in an industry hit hard by the pandemic or know your company isn't doing well, then you may be worried about your job. The good news ("good" being a relative term) is that if you're laid off through no fault of your own, you're generally entitled to unemployment benefits. But those benefits may not be enough to tide you over for long without a paycheck. Here are some important moves to make if you fear your job may be on the line.
1. Put more money into your emergency fund
While unemployment benefits may replace a portion of your paycheck (perhaps even a large portion), you may still be out a fair amount of money for as long as you're not working. That's why it's crucial to have an emergency fund ready. Ideally, you should have enough in your savings account to cover at least three months of essential bills, and if you aim for six months' worth, even better. If you can't sock away that much money right now, save what you are able. The more you can save, the more breathing room you'll have if your job goes away.
2. Identify budget cuts
If you're laid off and lose income, you may have to cut back on spending to avoid debt. Plan for cuts in advance. Examine your budget and come up with a backup plan. If you're on a month-to-month lease you can break easily, maybe you can move back home or make other less-expensive living arrangements to save on rent while you're unemployed. If your options are limited, look at cuts like canceling a cable plan or other smaller expenses. The key is to be prepared so if a layoff strikes, you're ready to react immediately.
3. Secure a side job
A side job may not take the place of your regular job as far as earnings. But it could be a lifeline if you're laid off and your unemployment benefits don't replace enough of your paycheck. It can pay to focus on any side job that's "scalable" -- meaning, a gig you can do more often as your schedule permits. For example, if you sign up to drive for a rideshare company three nights a week right now, you could potentially drive more often if your main job goes away.
Workers on unemployment currently receive a $300 weekly boost on top of their regular state benefits, and that boost is expected to increase to $400 a week once the latest coronavirus relief proposal gets signed into law later this month. While a layoff is always financially worrying, you may at least be entitled to more income than in more usual times. Remember as well that, in addition to unemployment benefits, you may be entitled to some severance pay from your employer, which could also help you get by while you look for work.
Getting laid off is a scary prospect, and one that's happened to a lot of us in the past year. If you take these steps, you may find that you're able to get through a period of unemployment with less financial pain.
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