Losing your job isn’t an easy pill to swallow. In fact, many companies from around the country are laying off large percentages of their workforce in order to cut labor costs. There are numerous considerations to keep in mind while you’re in between jobs, which can help you lay out a financial plan to make the most of the income you currently have. Follow the steps below to ensure a path of emotional and financial security if you’ve been laid off.
Step One – Secure Your Living Costs after a Layoff
One major cost you’ll need to consider is the cost of living. Living expenses are a huge factor to think about when you’ve been laid off, as many Americans spend 30% or more of their income on housing. If you lose your job, you likely won’t have a steady stream of income, meaning the cost of living can quickly feel like a burden.
If you’re looking to relocate after losing your job, there are a few things to consider. For example, you might want to decide whether to rent or buy, how long you’ll be in the new area, and how much you’re looking to spend each month on housing. If you know you want to relocate permanently, you may want to consider the use of a long-term mortgage. This option means you’ll be paying lower monthly mortgage bills, which can free up some more money month-to-month for other expenses. In addition, you’ll be paying as little as 3% down, which may make relocating for a new job a much easier pill to swallow.
On the other hand, if you don’t plan on moving after being laid off, there are certainly other routes you can take. Ideally, you’ll want to take some steps to reduce your housing costs. One available option, which can significantly reduce your monthly housing bill, is renting out part of your home. By doing so, you can easily reduce your monthly rent and utility bills, freeing up some income for other expenses. Alternatively, you can also focus on reducing your power usage by turning off any lights or electronics whenever possible.
Step Two – Research Your Potential Benefits
Although you’ve been laid off, it doesn’t mean you can no longer reap the benefits of the job you recently lost. An important step to take in the time immediately after being laid off is to figure out what these benefits still available to you are. Since it differs from job to job, consider researching exactly what you can receive in order to ease the burden of losing your steady income.
The first bit of compensation you can receive is through paychecks with any remaining income you’ve already earned, since many companies pay their employees either weekly or bi-weekly. Afterwards, you should also find out if you’re eligible for a severance package. Some packages include some sort of compensation, usually based upon your tenure at the company. In addition to this, some companies will offer continued insurance coverage, which can come in handy should you need to cover some health expenses as you look for a new job.
Another benefit you may be eligible for is unemployment reimbursement. This differs from state to state, so do some research on the unemployment benefits available to you. This is a great option after being laid off rather than being fired, as you’ll likely qualify since your termination wasn’t your fault. Overall, you shouldn’t miss out on compensation you qualify for, as any extra money can be tremendously helpful in the time after losing your job.
Step Three – Refine Your Budget if You’ve Been Laid Off
Since you likely won’t have the same stream of income you’re used to immediately after being laid off, tightening up your budget is a crucial step which ensures you’ve set aside enough money to keep afloat. Not only should you consider reducing toxic money behaviors, but you can also contemplate ways to guarantee you’re not overspending on the things you need. It can also be beneficial to look for any extra sources of income you can find for the time being.
A good way to keep a tighter budget is through keeping track of your finances. You can do this on your own, but it’s much easier to use some sort of online resource, such as a budget tracker. Using a resource like this can make it much easier to plan ahead, as you can create a full monthly budget which is categorized by different types of purchases. Also, many budgeting trackers can connect to your bank account, letting you track exactly how much you’re spending with each purchase you make. Thoroughly monitoring your spending habits will allow you to have a perfect sense of where your money is going, and where you can cut down on unnecessary purchases.
Alternatively, you can look for some ways to make additional income. Believe it or not, you can actually make money while decluttering your home. Consider anything in your home you may no longer need, and the money you can make from it! This can be anything from your kid’s old toys and clothes, all the way to any electronics or appliances you no longer need. Not only will you be able to make your home more minimalistic, but you can also make some extra cash, allowing you to stretch out your finances even further.
At the end of the day, being laid off doesn’t have to be super stressful on you or your family. In fact, this can be an opportunity to get a fresh start in your life. If you secure your living costs, maximize your severance benefits, as well as lay out a budget, you can stretch out your finances considerably. Although losing your job can certainly be hard, laying out a plan of action is essential for maintaining a healthy financial situation.