With the rise of recent corporate layoffs due to inflation and talks of a recession, it’s not uncommon to feel a bit uneasy about where you stand at your job. Job loss can lead to emotional and financial stress when you don’t know how you’ll pay your mortgage and other monthly expenses.
Nothing is for sure in an unstable economy, but there are some things you can do to prepare for what may come your way. Here’s an in-depth guide on what you can do to increase your financial stability before you face a job layoff.
Revise Your Budget
If you don’t have a monthly budget right now, you should create one as soon as possible. If your existing budget is based on your employed income, reanalyze all your expenses while considering potential job loss. Do you have a spouse who can cover the monthly bills if you’re unemployed? Do you have savings built up for times like this? These are a few questions to ask yourself as you review the budget.
It’s also important to reduce any expenses you don’t need to pay that can help save you some extra money. Some ways to reduce your monthly budget include:
- Increase your home insurance and car deductibles to reduce your monthly premium
- Cut your cable bill and opt for streaming services that cost less
- Cancel subscriptions to magazines or online websites you don’t need
- Reduce your air conditioning and heating usage each month
- Keep your lights turned off as often as possible
- Spend less on takeout and prepare more of your meals at home
Obtain a Life Insurance Policy Outside of Your Employer
If you have employer-based life insurance, it’s highly recommended that you switch to a policy outside of your employer. Even if you’re still employed, you can purchase an additional policy so that there are no gaps in your coverage in the event of a layoff. You can start by getting whole life or term life insurance quotes online to find the best rate for your budget.
Apply for Unemployment Benefits
If you were to lose your job, one of the first things you should do is apply for unemployment benefits to help supplement your income. You can learn how to file for unemployment in your state by visiting the Department of Labor’s Career One Stop Website. Some information you’ll need to have on hand when applying includes the following:
- Proof of job loss
- Social Security Number
- Phone number and address
- Previous employer’s name, phone number, and address
- Dates of employment
- Recent pay stubs
- Bank information
Build an Emergency Fund
If you have yet to build an emergency fund, now is the time. Consider high-yield savings account if you want your savings to increase over time. The ideal amount of money to have in an emergency fund is 3-6 months of expenses, but you can start with a goal of $500 to $1,00 to start. A little bit goes a long way.
You can increase the amount you save by making a few life changes, like cutting down on how often you eat out at restaurants, taking fewer vacations, and attending less occasional concerts and sporting events. These sacrifices are small compared to the long-term impact of not having the security of an emergency fund.
The Bottom Line
Even when you prepare, being unemployed is a stressful experience. You can mitigate your worries and improve your financial situation by revising your budget, applying for unemployment benefits, building an emergency fund, and switching to a new life insurance policy. The right approach should help you weather a few months of unemployment.