Money Management Tips For The Unemployed

Money Management Tips For The UnemployedMoney management tips would be something you need when your current employer decides to show you the door. There can be a number of reasons why you are let go in a company. Your job performance could be one of them. It is also possible that the company is experiencing some financial troubles. As a result, they need to let go of some employees.

According to RT.com, about 20% of American workers lost their jobs in the past five years. That is a big number and if you were one of them, your finances are the first one to get hit. This is why having valuable tips to help you weather this storm would come in handy. Here are a few of them that you can look into as you manage your finances.

Avoid burning bridges

One great financial tip for young adults and even seasoned employees is to never burn bridges even if you are being let go. If are being laid off, try to be as professional as you can be even if other people around you are unable to act the same way. Try to look at the positive lessons and experiences you got from the company.

It is also worth remembering that at some point when you are starting to look for another job, you might need to put in reference people. This can include former employers and even colleagues. If you left your last job amicably and you kept in touch, there is a good chance that they will give a great feedback for your potential employer.

Create a new household budget

Now that you are unemployed, there will be a lot of changes around you particularly your household budget. You need to simplify your finances to make it easy for you to monitor financial activity. It is ideal to downsize your budget and learn to manage a new and lower lifestyle. This can help you stretch whatever funds you have until you get a new job.

As you pen a new budget, you need to consider that there are four main pillars you have to focus on. These essentials revolve mostly on shelter, food expense, utilities and even transportation budget. This is one of the money management tips because you have to prioritize as you work with a “bare bones” household budget.

Lock in on your spending

As you lost your job and a steady paycheck is now questionable, you do not have much control on the income side of your budget. However, your current situation gives you more control over your spending and expense side of the budget. You can now pick every line item and assess where you can make adjustments and cuts as you deem fit.

The idea is to save as much as possible so weeding out wants and needs is a good first step. Do you really need that gym membership or can you put off until you get a new job? You can just jog or use body weight to exercise. Those monthly subscriptions can also be tapered down to help you save as much as you can in your funds.

Put off big-ticket expenses

This is one of those money management tips that makes a lot of sense especially because you are trying to stretch your funds. You would think that it is automatic that people stay away from big expenses when they do not have jobs. However, it is best to remind you especially because Businessinsider.com shared something interesting with today’s consumer buying behavior.

They found out that people are shunning small purchases and opting for big ticket items. These can be anything from cars, homes, and even boats. While you are looking for a new job, you need to make sure that you are able to allocate your funds to critical areas in your budget. The last thing you need is to buy a new car but not have enough money for gas.

Get a part-time job

One of the money management tips you can look into is to get a part-time job to tide you through a tight budget. There is no doubt that this can increase your income and help you pay the bills while you look for a steady job. It might even lead to a permanent job or the chance to network which can lead you to your next career.

Remember to not burn bridges? This is because your former boss might even give you a part-time job in the same office. They might even refer you to people they know in your industry looking for new talent. The idea is to start getting a steady income even if it is not the same amount as your regular job. Then you adjust and tone down your lifestyle so you can live within a smaller budget.

Be mindful of your credit scores

This might be the last thing on your mind but there is a reason why you need to watch you credit score in the midst of unemployment. For one, your potential employer might run a check and a low score could affect your chances. Though it is not the only criteria that they look into, it is better to have a great credit score. If you find that you have to relocate to a new place, your landlord might check your score as well.

Here is a short video on how your credit score affects your finances.

Work with your family

One of the most overlooked money management tips is letting your family understand your financial situation. This is because there are some people that hide it from their partners and even the whole family. The reason is they want to protect them and just manage it on their own. This can put a lot of stress on your shoulders. Besides, your family can help you out. You just have to tell them.

Resist the urge to raid your 401(k)

One of the options people look into when they lose their jobs is to dip into their 401(k) money. However, doing so can lead to taxes, penalties and lost of potential growth for your retirement fund. USNews.com shares that as you pay taxes on the withdrawal, doing it before 59 ½ also puts an additional 10% charge. This is called the early withdrawal fee. Not to mention that as you take out money, you lose out on the compound interest that can make your money grow over time. Pinching into your 401(k) should be a last resort and not the first thing that pops into your mind.

Get your reserve funds out

The best fund for these types of situations would be your reserve funds. This fund would have your emergency fund as well as you rainy day fund meant to cover big and small financial challenges. Your emergency fund, being the bigger of the two, is meant to cover your expenses during a job loss. So take it out and use it.

Make minimum payments

As you need cash in your budget while you are unemployed, it is a good idea to make the minimum payments on your bills until you get a new job. This way, you are able to conserve your cash yet still attend to your financial obligations.

These money management tips would serve you well when you find yourself being laid off. As you prepare for the next career move, you need to make sure that your finances can sustain the changes that are coming up ahead.