Over 40 Million Americans Lost Their Jobs: How to Manage Personal Finances When You Become Unemployed 

By  //  November 11, 2020

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Whether it is because of the current pandemic or economic issues that you have lost of job, it may be challenging to find a way out. Yet, there is no need to start panicking.

It can be hard to manage your personal finances when you have been laid off. We want to help you overcome this shortfall and offer you 5 useful tips and strategies for remaining financially afloat and getting back on track with your finances.

#1 Apply for Unemployment and Search for Programs 

Once you understand that the situation has changed and you won’t have your regular paycheck at the end of the month to support your needs, it’s time to act. Some people have resorted to the best installment loans to help them through. It can be a helpful strategy for being able to pay the bills on time.

Also, you should start looking for the available programs and file for unemployment. It is necessary to do it as soon as possible as the whole process is rather tedious and will definitely take some time to gather paperwork and wait for the result.

You should collect the proofs of your unemployment and check that you qualify. Even if you have doubts, it is worth trying. Particular requirements and extra details may be found on the site of your department of labor.

More than that, you can search for some programs from the government that are available in your area. Such resources can help you receive some monetary assistance for some time until you manage to land a new job.

For instance, the mortgage modification program is great for consumers who want to stay in their homes during challenging times and have an opportunity to repay the debt for these months later.

#2 Check Your Spending Habits 

Once you’ve filed for unemployment and started this process, it’s time to review your spending habits. The majority of people don’t realize that these habits affect their lifestyle and financial well-being.

If you need money for personal expenses, think about your savings. Why don’t you have an established emergency fund yet? Where all your money goes? Bad financial habits may ruin your monetary stability and dreams about financial independence.

Not only 40 million Americans lost their jobs but the real number can be even higher. And only a little bit more than 12 million were insured.

Source: https://www.statista.com/chart/18368/weekly-initial-jobless-claims/ 

“Specialists may be missing on the number of people who aren’t searching for a job at the moment. Still, they account to those who are unemployed,” mentioned Michael Farren, an economist at the Mercatus Center at George Mason University.

To learn how much you spend each month and where the paycheck goes, you can download numerous budgeting apps. Such online tools are available on the web and they are aimed at assisting your personal finances and helping you manage them better.

Also, you may need to collect all the receipts for the month to see what you have purchased. Being more organized and knowing this information will help you determine the spending categories that can be omitted.

#3 Lower Your Monthly Spending 

Now when you are unemployed, you don’t have the regular monthly income to spend.

In fact, the unemployment rate in the USA was about 3.58 percent in 2019, according to Statista.com. And now it is twice as high as last year.

Source: https://www.statista.com/statistics/273909/seasonally-adjusted-monthly-unemployment-rate-in-the-us/

Hence, it is obligatory to think about the categories that can be cut down. If you’ve found out how you spend your money so far, you will be surprised at the amount of cash that goes to unnecessary things each month.

Do you still need a manicure, pedicure, haircut, or that dinner out if you don’t have a steady job? While you are staying at home and searching for a new position, it’s quite easy to trim those expenditures.

Also, you can cut back on:

• Clothes. You will have to go to the job interviews but you can think of clothes you already own. Otherwise, ask your friend or relative who has the same size to lend you their suit. Another option is to go to secondhand or thrift shops and purchase some cheap clothing there.

• Groceries. Now that you stay at home, you can plan your meals ahead. Why don’t you try shopping with coupons or go to cheaper stores? If you have a shopping list, you won’t waste your cash in the supermarket.

• Transport. While you don’t need to commute to work, it may be worth selling your car. You can either purchase a cheaper version or wait until you have your monthly paycheck back so that you can afford to pay for the car again.

• Monthly bills. Another option is to trim your internet and mobile phone bills. You can contact your service providers and ask for a discount or search for cheaper options until you get back on track with your finances.

#4 Get in Touch with Your Lenders 

It might be embarrassing to do it, but if you contact your creditors as soon as you lose your job, you may be able to negotiate better terms of your loans.

In case you have already lowered your monthly costs and even applied to the unemployment program but still don’t have enough to pay down the debt, this action can be extremely helpful. This way you will protect yourself from default and your debt won’t go to collections.

You will be surprised but creditors may be willing to help you by lowering your monthly interest or offering a delay on the payments.

#5 Set Your Budget and Start Job Searching 

It’s time to establish your monthly budget. When you don’t have sufficient funds, it may be challenging to support your needs. Having a set monthly budget will help you understand how much you need to allocate to certain spending categories.

Firstly, you should pay the bills on time. Secondly, you should have some cash set aside for groceries and living needs. Finally, you need to keep on repaying the loans and any debt you might have. If there is something left, go ahead and leave it for your retirement savings or establish an emergency fund.

All in all, it is certainly not the end of the world. It may be frustrating and devastating to lose a job. But if you remain positive and take a deep breath while thinking about your options, you will be able to find the most suitable solution and stay on top of your personal finances until you land your dream job.