6 Financial Steps to Take When Losing Your Job

The coronavirus has taken a toll on the U.S. economy and more than 42 million Americans have filed for unemployment over the last few months. During these uncertain times, you might feel overwhelmed and unsure of what your next steps should be after losing your job. The following six steps can help ease some of that tension and set you on the right path.

Determine the current state of your finances.

Before you can plan for the future, it’s important to gauge what your financial situation currently looks like. Once you have a realistic idea of what money you have and what money you’ll need, you can create a more specific game plan to keep you and your family on track.

1. Trim the fat. Conduct an informal audit of your current financial situation. Compile a list of your monthly expenses, categorizing each expenditure into essential “must have” or non-essential “nice to have” categories. From streaming services to monthly memberships, pause or cancel any unnecessary subscriptions or recurring payments until you’re back on your feet. Also, determine which essential payments need to be made in full each month and which have a minimum payment option you can take advantage of until you land a new job.
2. Are you eligible for any benefits? Find out if your former employer provides a severance package, which may take the form of pay or benefits. Inquire about any job-hunting assistance that might exist, such as resume assistance or counseling, which many employers provide. If you received health insurance through your employer, be sure to ask when that coverage will end. Immediately after losing your job, determine if you are eligible for unemployment benefits and figure out when you can apply and what that process will entail.
3. Contact your lender (for loans or credit cards). If you are worried that you may not be able to make upcoming payments on your credit card, check if your credit card company has any programs that assist those who are experiencing financial instability. You may be able to create a payment plan that better fits your circumstances. You can also check with your financial institution to see if your lender has any interest-only or skip-pay options for loan payments.

Plan for the future.

Planning for your future is always easier when you’re financially stable — but planning ahead when the future of your finances is uncertain is equally as important. Having a detailed, actionable strategy for finding a new job and adjusting your spending can help make sure you don’t create a situation that could keep you financially strapped for months or years.

4. Job hunting is your new job. Update your resume and start looking and applying for new jobs on a daily basis. Make job hunting your new full-time job, networking and scouring job boards and social media sites during regular working hours. Don’t forget to think outside the box. Explore odd jobs and digital part-time gigs that can provide additional income until you’re able to find a full-time position.
5. Make a spending plan. Organize your spending into different categories, such as entertainment, food, transportation, etc. Doing so will show you where your money is going and can help highlight areas in which you may be able to reduce your spending. Adjusting your weekly or monthly budget to reflect your current circumstances can help you set new, realistic spending expectations and prevent you from digging yourself into a financial hole. Determine if there are any additional sources of income available to you. Does a friend or family member own a business and need help? Do you have a hobby that can easily be turned into a source of income?
6. Consider consolidating or refinancing your debt. If you have multiple loans that still need to be paid during this challenging time, consolidating or refinancing your debt may result in a lower interest rate and lower monthly payment. A lower interest rate may come with a longer payment period and more money being paid in the long run, but can help prevent you from lapsing on payments on important loans.

Losing your job can be jarring and frustrating. Planning your next steps doesn’t have to be. If you need assistance in mapping out your financial future, meet with one of our team members (virtually or in person) to get started today.