Budgets and Money

How to Budget Money in Preparation for a Job Loss

The best way not to stress is to be prepared.  As soon as you know you are going to lose your job, there are several things you may need to do right away.

Preparation Today Can Reduce Uncertainty Tomorrow

Getting fired or laid off can be traumatic. Add in a healthy dash of anxiety about your pending financial insecurity, and the situation seems even worse. Fortunately, there are steps you could take now to help ensure that you can stay solvent for as long as possible, even if you don't have savings or an emergency fund to fall back on.

Apply for unemployment benefits immediately after losing a job.

Many people are unaware that unemployment payments are not retroactive. They only start the day you apply for unemployment, not when you lose the job, and your first check or disbursement can take more than a month to process depending on your state. If you're not certain that you actually qualify for unemployment benefits, apply anyway. Even if you were fired, you'll have the opportunity to contest your termination with the state's Department of Labor via this process.

Make a revised budget.

It's time to take a good, hard look at your finances. If you don't already have a family budget, make one. (If you don't know how to budget money, you can find out how to make a budget and stick with it in the Protective Learning Center.) Once you've outlined all of your expenses, look at several recent bank statements to see where the rest of your money goes. As you review these documents, it may become obvious what little luxuries will have to be sacrificed.

Drop the non-essentials and adjust your lifestyle accordingly.

While it's optimistic to assume that you'll have a new job within a month or two, it may not be wise to live as if it's a guarantee. If you know a job loss is coming, you may want to make the necessary adjustments to your lifestyle ASAP, and take the time to explain to your family why it's important to scale back. Don't sugarcoat it, it could be better if your spouse and/or children were to see and understand that you're legitimately worried or anxious about your current situation.

Take on a new role.

Try as you might, it is difficult and unlikely that you will hunt for jobs eight hours a day. You might want to take over as many domestic duties as you can, and if you don't know how to cook or how to budget money, now's a great time to learn. Take care of couponing, grocery shopping, child transportation, etc. Do whatever you can to assist your working spouse while making your single-income home more harmonious. If there are freelance opportunities in your line of work, research them, and don't be afraid to get back in touch with old business contacts. You might also consider taking up a part-time job outside your normal field of expertise if your family needs the money.

Make the most of the assets you have.

If your unemployment period lasts longer than expected, you might consider liquidating some of your assets. Consider selling an additional vehicle you're not using, or hosting a garage sale to raise extra funds. If you have a large house or an in-law suite, you might consider renting out a room on a monthly basis. Do what you can to survive the short term but not to damage your long term planning efforts such as retirement accounts. Be wary of borrowing from your retirement funds during this time, as there are usually penalties for early withdrawals.

If you need additional advice about how to budget money, preparing for the unexpected, or building up up your emergency fund, consult the Protective Learning Center.

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All Learning Center articles are general summaries that can be used when considering your financial future at various life stages. The information presented is for educational purposes and is meant to supplement other information specific to your situation. It is not intended as investment advice and does not necessarily represent the opinion of Protective Life or its subsidiaries.

Learning Center articles may describe services and financial products not offered by Protective Life or its subsidiaries. Descriptions of financial products contained in Learning Center articles are not intended to represent those offered by Protective Life or its subsidiaries.

Neither Protective Life nor its representatives offer legal or tax advice. We encourage you to consult with your financial adviser and legal or tax adviser regarding your individual situations before making investment, social security, retirement planning, and tax‐related decisions. For information about Protective Life and its products and services, visit www.protective.com.

Companies and organizations linked from Learning Center articles have no affiliation with Protective Life or its subsidiaries.

How To Budget Money

Losing a job can be traumatic. Often, you don't know what to do first - including how to budget money now that you will no longer have a paycheck. This article looks at how to budget money in preparation for an impending lay-off or job loss. For more information, visit the Protective Life Learning Center.

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