How to Manage Your Finances While Unemployed

Whether due to layoffs, health issues, or other unexpected events, unemployment can be one of the most stressful experiences for adults, regardless of age. With the emotional and mental toll unemployment can take, there could be steps you overlooked when protecting yourself financially.

How to Keep Yourself Financially Stable During Unemployment

While unemployment is often unpredictable, there are preparations you can make that can have a huge impact. If you built an emergency fund and managed your expenses effectively before you lost your job, it can aid you. And if you’re currently unemployed, the following tips from Security Plus Federal Credit Union can help you manage finances until you transition into a new career.

1.Set a Budget

When facing a change in your income, your first step should be creating a realistic budget. Start by reviewing your current finances and listing all your sources of income, such as unemployment benefits, savings, or part-time work. Then list your regular expenses. You will need to divide these into essential and nonessential. Essential expenses would include mortgage/rent, utilities, groceries, your cell phone, and more. Nonessential expenses would be entertainment, dining out, vacations, subscriptions, etc.

Try using budgeting tools, such as Securityplus FCU’s budget calculator or a spreadsheet, to track income and expenses. The key is to separate your needs and decide where to cut back. A reliable budgeting rule would be the 50/30/20 rule.

• 50%: Essential expenses

• 30%: Nonessentials

• 20%: Savings or debt repayments

The first place to cut expenses is the nonessential category. The 20% for savings or debt-repayment expenses can be adjusted based on your current situation. Once you get back on your feet, you can begin to save money again and have a little fun, too¹.

2. Monitor and Reduce Expenses

Start identifying where you can cut costs. It may initially be challenging to cut out specific subscription plans; however, the savings you would gain from these cutbacks will be worthwhile in the short term. You can treat yourself to subscription services when you are more financially stable. You should also look for less expensive alternatives to recurring fees, such as car insurance or phone plans.

Additionally, make sure to plan for costs such as healthcare premiums, which can be hard after a job loss. You may be able to qualify for reduced premiums through the Health Insurance Marketplace or COBRA. If you’re having trouble paying bills, you can contact your creditors. Many companies will offer some payment flexibility to those who have lost their jobs.

3. Unemployment and Assistance Programs

If you’ve lost your job, filing for unemployment benefits should be one of your first steps. Unemployment insurance payments vary by state but can replace a portion of wages for up to 26 weeks. Don’t think you qualify? There’s no harm in applying! Other government assistance programs include:

• Supplemental Nutrition Assistance Program (SNAP): to help with food costs

• Temporary Assistance for Needy Families (TANF): for financial assistance

• Medicaid or Children’s Health Insurance Program (CHIP): for health coverage
   

4. Find Other Sources of Income

While searching for a new full-time position, temporary or part-time work (e.g., retail or dog walking) and gigs (Uber, DoorDash, etc.) can provide another stream of income that could help ease the burden. According to the 2023 Upwork report, 64 million Americans are gig workers, which shows a promising opportunity to make some cash on the side.

5. Consider Loans²

While loans shouldn’t be your first step while unemployed, they can help bridge the gap for a short time. If you have a good credit score, you could apply for a personal loan or line of credit for essential expenses. Credit cards can also help earn enough points or rewards to offset other costs. However, you will need to keep interest rates and repayment terms in mind, especially when you are unsure about your next paycheck³.

6. Local Resources and Support

Local charities and nonprofit organizations can provide additional support during your tough times. From food banks to financial assistance, there are programs that have been created to support people going through the same experience. Check out organizations like Feeding America or a local Maryland charity to find food or other assistance⁴.

Whether you’re unemployed now, starting a new job, or taking control of your finances, these tools can help you stay afloat during hard times. And remember that the team at Securityplus FCU is always here to help you navigate – in good times and bad.