Financial Survival After a Job Loss
Here is a list of steps that we recommend starting with; depending on your situation there of course may be additional pertinent topics.
Analyze Income Options Available
There are two key different sources of income you may receive after you lose a job. The first is unemployment, the amount that you receive is dependent on your income and there may be benefits that you can receive from the federal and state level. I always recommend starting this process by calling your state unemployment office or checking out their website to get direction on how to proceed. The second source of income could be through a severance package. These packages can come in many forms ranging from a continuation of income for a period of time, a lump sum payment or a continuation of other benefits that you with your employer. Under any scenario, it would be crucial to discuss this with your HR department.
Review Your Budget
When you review your budget in this situation it is important to analyze what are your discretionary expenses vs. your fixed expenses. Your discretionary expenses are typically your expenses that are easy to scale back such as going out to dinner or buying jewelry, on the other hand your fixed expenses could be debts that you have like a mortgage or rent payment. After you have compiled how much you need each month, you can verify with your income sources what your budget needs to look like and how far your discretionary expenses may need to be cut.
Analyze When to Make Payments
When you are looking at your budget during these times, it can be helpful to analyze when your payments are scheduled to be processed for all of your debts/services. A key tip can be to push the dates back to the latest day possible without incurring a penalty and cut back on prepaying any other expenses that you have.
Analyze Access to Financial Accounts
After establishing your budget for what you need to get buy each week/month and finding your income sources I recommend verifying where you can get money from if you need it. The first place to look is your emergency fund, as we have discussed in past posts this is an account hopefully around 3-6 months of your living expenses and is directly in a savings account. This should be easily accessible and able to bridge you for a good period of time. After that, I would recommend looking at different after tax investment accounts if that is applicable, the last type of account you would want to tap into would be your retirement accounts.
Review Your Health Insurance
This can be especially important if you had health insurance coverage through your employer. Making sure you either opt in to a continuation of your health insurance benefits through COBRA or finding a different appropriate level of health insurance coverage for you and your family. Under either scenario it can be a costly mistake to forget about health insurance.
Get Ready for the Next Stage
After the maintenance and lifestyle adjustments have been put in place, it is time to be planning for the future again. The first stage of course is brushing up your resume and making sure it is up to date with the times and your skillsets. Allocate the time you need to update this and certain times to sit down and apply for new roles. In addition to this, don’t forget about old financial accounts such as a 401(k) you may have had with your past employer that you could rollover to an IRA or combine in your future employers 401(k).
These are just a few tips to help you get back on your feet, the key takeaway is that even when times can feel difficult there is a process to follow and many around to help.
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