At some point in life, many of us worry about not being able to make ends meet and it can become a very stressful situation to bear. Being fired or laid off from your job is a very common, yet unpredictable, part of life.
But even in the face of such adversity, we here at Abigail Murray, CPA, LLC wholly believe you can improve your situation with the right financial planning.
Before panic takes over, it’s important to take a step back and analyze a few things in order to take control back of your financial situation.
Consider taking the following steps in the face of unemployment:
- Take advantage of programs like unemployment.
Very often, both big and small organizations go through downsizing, which is the elimination of staff positions on the operating payroll. Downsizing is intended to be a permanent downscaling, and a layoff is intended to be temporary, but regardless of which circumstance your situation falls under, you may be eligible for unemployment and other governmental aid.
You can get in contact with your state’s unemployment benefits office to obtain more information about your potential eligibility. If you discover that you are in fact eligible, we recommend that you apply for unemployment as soon as possible.
- Revise your health insurance plan.
Your health insurance was probably covered by your previous employer, but it doesn’t necessarily mean you will lose it if you no longer work there. You can speak with the company’s Human Resources department about continuing your health coverage. This option can be an expensive one though and perhaps getting a new policy will benefit you more.
You may also be able to enroll in marketplace health insurance for the rest of 2017. Individuals who have recently lost their job may be eligible for marketplace coverage.
- Prioritize your expenses.
It can be a bit terrifying having to prioritize what bills are more important than others, but in the midst of a financial crunch, it may be necessary to make some sacrifices and pay the necessities first. The essential expenses to pay off should include rent or mortgage, utilities, food, and insurances.
- Create a budget
Some companies may offer a severance package, but without a secure income, it is highly unlikely that money will last very long. We cannot stress how important it is to organize your financial responsibilities and create a personal budget based on the most vital expenses – especially if you can’t rely on savings.
- Speak with your creditors.
Even with the help of a severance package and unemployment benefits, it may be difficult to keep up with all your payments. Because you don’t want to ruin your credit during this time frame, you should immediately reach out to your creditors to let them know about your situation.
Some creditors may offer short-term hardship programs that will at least help to reduce your monthly expenses, but they usually won’t last longer than 6 months to a year.
Don’t wait! The only way to find out is to call and ask.
- Make cuts where necessary.
This goes hand-in-hand with creating a budget; you’ll need to recognize where you are making unnecessary purchases and cut back as needed. This can include certain luxuries such as cable costs, movie streaming services, cell phone related costs, constant restaurant dining, and the likes.
- Take the necessary steps and start looking for another opportunity.
The most important thing to note is that you must not lose hope nor confidence when becoming unemployed. Although for some the experience can be overwhelming, we encourage you to remain optimistic. Update your resume or pick up some additional training as needed.
If you acquire a job in the same field you were previously in, you can claim those job search expenses as itemized deductions on your tax return.
- Don’t stop living.
The stress of being unemployed can often lead you to neglect your own health, relationships, and personal well-being. However, it is important that you maintain some semblance to your “normal” lifestyle including exercising, eating properly, maintaining relationships, and generally just keep up with your hobbies.
Don’t make a tough situation harder by ostracizing yourself from loved ones. Keep up with positive activities and this will give you the energy and confidence to see the situation through.