Written by Adrian Gentilcore, Multi-passionate Seniorpreneur
Adrian Gentilcore is a multi-passionate seniorpreneur. She runs Your Fairy Techmother for tech support services and Your Fairy Debtmother for financial coaching.
In today's challenging job market, many individuals find themselves grappling with an uncertain future. Unemployment, whether lasting weeks, months, or even years, can place significant strain on personal resources.
It’s essential to be both strategic and smart in managing money during this difficult time. Below are key steps to help navigate the financial challenges that come with job loss.
1. Assess your available funds
One of the most crucial steps is assessing the financial resources you have at your disposal. This involves calculating any unemployment benefits, severance packages, vacation payouts, side hustle income, child support, and savings. Understanding exactly what your budget is monthly and overall is both smart and strategic.
It is important to avoid dipping into retirement funds, such as 401(k) accounts, which can lead to long-term financial consequences. These funds should remain intact as much as possible to safeguard your future. We’ll discuss more in Step Five.
2. Create a budget and drastically reduce non-essential expenses
The next step involves evaluating your monthly expenses. This includes bills, groceries, school fees, and discretionary spending like dining out or entertainment. Creating a priority list will help identify which expenses are essential and which can be cut.
Dave Ramsey defines the major priorities as the "Four Walls Expenses":
Food
Shelter
Utilities
Transportation
Non-essential expenses, such as subscriptions, dining out, or new clothing, should be reduced or eliminated to ensure your available funds stretch further. You can resume a more normal spending pattern once you’ve started your job, but unemployment is a financial crisis and should be treated as such.
3. Manage credit card payments
When facing financial hardship, it’s important to address credit card debt carefully. If you're unable to make payments, contacting your creditor to inquire about hardship programs can provide relief. Many credit card companies offer assistance through reduced payments, lower interest rates, or waived fees. However, it's essential to understand that you may not be able to use the card during this period.
If you anticipate needing access to credit, consider making minimum payments to preserve your credit rating while keeping access to your credit line for essential expenses.
4. Secure medical coverage
Health insurance is a vital consideration during unemployment. While COBRA coverage may be expensive, maintaining insurance is crucial in the event of a serious illness or injury.
If COBRA is not an option, exploring alternative health insurance plans is essential to avoid being left unprotected. One serious illness or injury could tip your family over into bankruptcy or extensive debt.
5. Avoid tapping into retirement funds
Withdrawing funds from retirement accounts during a period of unemployment can have long-term consequences. Most people have severely underfunded 401(k) accounts to start with, and dipping into these funds could create a shortfall that can’t be recovered during your remaining work years.
The only reason to access these funds is if you are in danger of going hungry or becoming homeless. Here is a helpful article about women and retirement, but it’s an issue for both men and women.
6. Explore creative & smart ways to reduce costs and boost income
One of the most controllable expenses in your budget is food.
By using meal preparation strategies and cutting back on dining out, significant savings can be achieved. There are many websites offering practical advice on affordable meal planning and preparation, allowing you to stretch your food budget further.
Additionally, consider starting a side hustle to generate extra income. There are numerous low-cost, flexible opportunities that can bring in between $500 and $1,000 a month.
Other options include renting out a room, selling handcrafted items, or offering services such as tutoring, childcare, or alterations.
It's important, however, to avoid side hustles that could put personal assets like your vehicle at risk, such as Doordash, Uber, Lyft, or delivering packages.
A final note
Surviving a period of unemployment requires a strategic and disciplined approach to managing your finances.
While the job market may present challenges, adopting smart financial practices can help maintain your credit score, preserve your savings, and ensure you’re in a strong position once employment is secured.
By being proactive and implementing these strategies, you'll be better equipped to navigate this difficult time and come out the other side with financial stability intact.
Read more from Adrian Gentilcore
Adrian Gentilcore, Multi-passionate Seniorpreneur
Adrian Gentilcore is a seasoned entrepreneur with a 40-year career in Corporate America and a proven track record of creating successful online businesses. Now a full-time freelancer, she operates two distinct brands: Your Fairy Techmother, where she specializes as a LinkedIn Trainer, Email Marketer, and Web Designer, and Your Fairy Debtmother, where she offers her expertise as a Debt-Free Coach and popular Personal Finance Blogger. In her 60s, Adrian continues to run her businesses alongside her 75-year-old sister, together coining the term seniorpreneur to capture the spirit of their dynamic partnership.
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