How to Budget After Losing Your Job
“I need to talk to you,” my husband said as he walked through the door in the middle of the afternoon. I knew instantly that something was wrong. He was supposed to be at work, he was never home at this time of the day. It was then that the words I never ever thought I would hear came out of his mouth: “I was laid off.” My perfect little world came crashing down.
My mind swarmed with a million questions, “How could this have happened???,” and “What will we tell the kids?,” but the biggest question was, “How will we survive financially?” Every bill, every expense, ever purchase we had made or would need to make within the next few months came instantly into mind. I knew we needed a plan and we needed one now. Many of you might have experienced something similar. Maybe both you and your spouse lost your jobs, as the current pandemic has taken a toll on many careers. Perhaps you are a stay at home parent, like me, and have watched your spouse’s income vanish.
I’m here to tell you that you will be okay. I know it feels scare, but there are many steps you can take right now to help manage your money.
1. Pause all unnecessary spending.
It’s time to take a good hard look at how you are spending your money. Cut out all spending that isn’t absolutely necessary. Here are a few possible expenses to cut: TV and magazine subscriptions, entertainment, clothing, gym memberships, and eating out.
2. Learn what benefits you will have.
It’s important for you to find out how much supplemental income you will be receiving during your time of unemployment. This might be in the form of a severance package from your former employer, or government unemployment aid. Talk to the HR office at your former place of work. They can tell you everything you need to know about severance pay, insurance, and other job benefits after losing your job. To apply for unemployment, contact your local unemployment office. We found them to be very helpful and honest with us during this process.
3. Budget for necessities.
Now that you know how much supplemental income you will have coming in, it’s time to make your budget. If you have a 6 month emergency fund, that’s great, but try to make your budget without using any of your emergency fund. I understand that getting laid off is an emergency. But, you don’t know how long you will be without work, so I recommend trying to live off of your unemployment benefits, if possible.
Your budget should be focused only on necessities. These will be the bills you have to pay in order to live, such as mortgage/rent, utilities, insurance, groceries, etc. If you are unsure how to make a budget, be sure to print out my free budgeting cheat sheets. These cheat sheets will tell you everything you need to know to budget successfully.
4. Negotiate your bills.
The next step you should take is to call different providers to negotiate your bills to lower rates. This will help you lower your monthly bills and allow your money to last much longer.
Start by calling your internet provider, insurance agent, and all creditors. Tell them about your current situation and ask what they can do to help make your bill more affordable. Most providers will be willing to work with you. We have been given new promotions or discounts and had our interest rate lowered on credit cards. You probably won’t hear a “yes” every time, but it is always worth trying!
5. Find ways to earn extra cash.
Your main priority during this time is to find a new long term job. But, I also recommend finding a few other ways to bring in some extra cash. This will help your unemployment benefits and emergency fund last longer.
A few side hustle suggestions are: handyman jobs, childcare, pet sitter, online tutor, etc. Start asking around with people you know to see if they have any odd jobs that they might need help with. Networking is one of the best forms of job searching.
Keep Your Chin Up
The most important thing you need to remember is to stay positive. Take a minute to cry your tears and feel your worries. And then, get up, dust yourself off, and go to work.
Back when I first heard that my husband had lost our only source of income, I thought we would lose everything—but we didn’t! Through a lot of hard work, budgeting, and sacrificing, we made it through. I promise you if I can do it, you can too!