Do you find it hard to believe there is a way to save money after experiencing sudden job loss?
Let’s be honest. Losing your job suddenly or at any point is an extremely stressful experience. Not knowing how your bills will be paid, where your next meal or next paycheck will come from can make it quickly seem as though your world is caving in around you.
Although job loss is a fate most of us would like to avoid, the reality is… IT HAPPENS. The Covid-19 pandemic brought the reality and effect of sudden unemployment to the forefront. But there is good news! Because even if you find yourself staring unemployment in the face, there is hope. The fact remains that you can save money and even enjoy life as you search for gainful employment.
In this article, you’ll discover practical ways to save money while navigating through the experience of sudden job loss.
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Use your Rainy Day Savings and Resist the Urge to Reach Into Your Retirement Account While Dealing With Sudden Job Loss.
It is best to use the money from your emergency savings fund and ignore the urge to cash out your retirement savings when you experience unemployment.
You’ve likely heard the saying, “always make sure you save for a rainy day.”
Well, my friend, if you are currently experiencing sudden job loss, your rainy day has indeed arrived. It is safe to say that unexpected job loss qualifies as an emergency. So, any funds you were saving and placing into your emergency savings account should now be used during your time of unemployment.
As enticing as it may seem, it is best to resist the temptation to cash out your retirement account. One of the main reasons to choose not to do so is because most retirement savings plans are portable. Meaning, you can take the plan to your new employer or you can choose to rollover the savings plan into an IRA.
A disadvantage of choosing to cash out your retirement savings plan is that you will be taxed on the income. You may also be subject to paying an early withdrawal fee.
Choosing to rollover the account to an IRA or to a new employer means you are still able to grow money within this account without facing tax penalties.
DIAMOND TIP:
Are you currently employed?
Are you applying funds towards a Rainy Day Savings or Emergency Account?
If not, consider this your sign to begin your Rainy Day or Emergency Fund.
An app that is beneficial to use is Digit. It takes the guesswork out of saving. I have been using Digit for some time and I am impressed with how much I am able to save without realizing I am even saving.
If you don’t think you can save on your own I suggest you give Digit a try!
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Recognize which expenses are truly essential While You Navigate Through Unexpected Job Loss
During periods of unemployment it is important to identify your essential day to day needs and eliminate all unnecessary spending. Unemployment will heighten your awareness of things in your life that are absolute necessities and those that are merely desires.
If you are finding it difficult to make this distinction, then it may be necessary to create a detailed list. Use this list to identify everything you spend money on each month. Categorize this list into items required for living such as food, shelter, child care, and automobile expenses.
You may need to comb through this list several times to further remove items and identify unnecessary spending. Reducing your spending in the area of nonessential items, allows you to further cushion your emergency fund. This will create an opportunity to stretch those funds even further. With unemployment comes uncertainty, and it is wise to do as much as possible to remain afloat with your finances.
Once you’ve identified your essential items, map out a budget that allows you to stick to only necessary spending.
Focusing on necessary spending will prevent you from straying away from your budget.
This will help you remain mindful of the money that is readily available to you and will deter you from frivolous spending.
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Identify Bill Payments You Can Pause, Cancel or Unsubscribe To During Your Period of Unexpected Job Loss
After identifying what is absolutely necessary, you can then unsubscribe, pause or cancel all nonessential services during your time of unemployment.
By now, you’ve discovered the benefit associated with having an emergency fund and how helpful it can be when faced with sudden job loss. You can further improve your savings by contacting your service providers and either placing your nonessential services on pause or cancelling them completely.
Expenses associated with services such as Netflix, Hulu, Sirius and Spotify although great to have, are likely not an absolute essential as you will spend most of your time searching for a new job. If parting with all your streaming services proves to be too difficult you can select one of your most used services and place the other items on hold until you are able to regain employment.
Other ways to reduce expenses.
You can also reduce expenses by pausing gym memberships and identifying other sources of physical activity. Family outings at the park can serve a dual purpose. You can get in some physical activity while spending time with your loved ones. If the park isn’t an option, you can use sites such as YouTube to find workouts to do at home. There are many free options for physical activity that do not require you to ever set foot in the gym.
Dining out, although convenient, is another source of unnecessary spending that can be eliminated as you search for employment. You can use your free time at home to learn a new recipe or revive your culinary skills. This time can also be used for families to cook meals together and connect in this way. This allows you to spend time together as a family while enjoying a home cooked meal. Preparing meals at home during unemployment may encourage you to continue this money saving practice even when you begin working. This will ultimately increase your overall savings even after you are no longer unemployed.
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Find things that you and your family can do for Free-Ninety Nine as you Journey Through Sudden Job Loss
Losing your job unexpectedly is stressful and can be disappointing but it can also be a rewarding experience if you approach it with the right mindset.
When you lose your job, it is easy to enter into a mindset where you feel completely defeated. And if you fail to identify when you enter this mindset it may be difficult and nearly impossible to bring yourself out.
The best practice is to create as much normalcy as possible even when your situation with job loss is something that is foreign to you. The beauty of sudden job loss is that it does require that you get creative and think outside the box.
You can seek out your local library and community centers for events that may be free. Pre-Covid there were outdoor movie nights at the park that you could take some time out and enjoy with the family at absolutely no cost to you. Libraries are still open, and usually have a selection of movie titles and audio books that you can choose for yourself and for your family. You can plan a family movie night and also put those cooking skills to use and enjoy the time with your family without shelling out a fortune.
Since you have more time on your hands you can also look into volunteer opportunities. This can be a solo project or you can include your entire family. This will provide an opportunity for you to give back and it will raise awareness regarding issues that others in your community may be facing . Additionally, volunteer work will also increase your network and it can ultimately lend itself to potential job leads.
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Reach out to others for help while you are dealing with Unexpected Job Loss
One of the best things you can do during the time you unexpectedly lose your job, is to stay connected. It is important to have a support system during difficult times. Your support system can be family, friends or even your previous co-workers. Let those whom you trust know what is going on so that you do not feel alone. A simple phone call has the ability to change your entire day and mindset when you are experiencing unemployment.
Additionally, you want to make sure you have made contact with the necessary Social Service Agencies in your area. During periods of unemployment, you may be eligible for Supplemental Nutritional Assistance, Medicaid and even Unemployment Benefits. These items can help bridge the gap as you seek out new job opportunities. These services can also connect you to local resources such as church outreach, community food banks, workforce and career training.
When you Find Yourself Dealing With Sudden Job Loss
Sudden and unexpected Job Loss is unfortunate and at times extremely difficult. Remind yourself that this is only temporary and things will get better. Some days will be easier than others and other days you may feel ready to throw in the towel.
By implementing a plan that causes you to drastically reduce your budget, you are taking steps that will help ease some of the burden. The less you have to worry about money and the more you can stay afloat during your season of sudden job loss the more focused you can remain on your ultimate goal of obtaining employment.
Although difficult, sudden job loss is not something that you must endure alone and there are resources available to assist you. Seek out those resources and connect with your network to make this period of time as bearable as possible.
This is only a season. By employing the right tools and maintaining a positive mindset you can remain motivated as you seek employment.