You may have lost your job already, or it's something you're concerned about. Either way, the keys to surviving a job loss financially are to plan ahead, take stock of your income, and cut your expenses.
If you haven't been laid off, it's a good idea to plan ahead for that possibility. It's hard to know how long you'll be out of work, so to be on the safe side, prepare for at least six months of unemployment.
Prepare A Survival Budget.
Start with a list of all your income and expenses. You might already have a budget that you can use as a base, but your survival budget should be a bare-bones version of your regular budget. Include only expenses that are necessary.
If You Lose Your Job, Find Some Income.
Start by checking with your former employer. Are you eligible for severance pay? Also, check with your local unemployment office to find out if you're eligible for unemployment benefits. You can receive at least 26 weeks of benefits (more in some cases).
Reduce Your Expenses
Such items as magazine subscriptions, health club memberships, extra phone services, credit cards you don't use that have an annual fee, dining out regularly, and extra pay services on your cable television are examples of some of the expenses you can trim from your budget. You also may have to put off that planned vacation until you're back on your "working" feet.
Talk With Your Creditors
Try negotiating with your creditors to lower interest rates on your credit cards, defer a payment or two on your car loan, or reduce your monthly payments temporarily. You also may be able to lower your home mortgage monthly payments. You'll have to admit that you're facing some financial difficulty, but if your credit is good, now's the time to make the calls. Along those same lines, check if you have credit insurance. Credit insurance will make your bill payments when you're unemployed. However, you may have to wait a while before receiving benefits.
Increase Your Income
Consider a part-time or temporary job. This will provide another source of supplementary income while you search for your next full-time job. Also, your spouse or partner may be able to get a job if he or she is not already working, or pick up more hours at a present job.
If You're Really Strapped
If you have enough equity in your home, sometimes you can obtain a home equity line of credit even if you've lost your job. You'll only pay interest on the portion you use. But you'll still have to make a monthly payment, so make sure you're able to afford the new loan payments before you put your house on the line.
If All Else Fails
If money really starts getting tight, be prepared to take more drastic steps. You might consider moving from your home and renting it temporarily. As a last resort, you may have to consider selling bigger items like your car or even your home.
All Is Not Lost
A job loss is not the end of the world, even though it may feel that way. Mapping out your priorities and drafting a bare-bones budget can help you come up with your own financial strategy for job loss survival.
Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2020