How to adjust your budget after a job loss

“What to do after losing your job”

“How to make ends meet when you’re newly unemployed”

“Budgeting tips for someone who just lost their job”

Whatever the internet search was that brought you to this article, I’m happy that we found each other, but I’m so sad that this is the context that brought us together. 


If you recently lost your job or are concerned that job loss may be on the horizon, let me first say: I’m sorry. Job loss is never easy, but it can be particularly difficult in a season like this one. The economy is on a downward trend, inflation is increasing, and job options seem limited.

While the situation may seem discouraging, I don’t want you to lose hope. Just because you are entering a season of joblessness does not mean that your entire life will be derailed—especially when it comes to your finances. As you navigate the job search, there are ways to appropriately manage your expenses and budget that will set you up to continue to reach your financial goals, stay on top of important payments, avoid racking up high-interest debt, and minimize the emotional toll that financial stress can take on you and your loved ones.

It’s okay to feel afraid right now, but I am going to give you the actionable steps you need to take to face your fear head-on, preserve your financial well-being, and come out on the other side set up for financial success.

Let’s go.

Assess What Benefits You Qualify for

There are several protections in place to provide financial help to people who experience unexpected job loss. 

Unemployment benefits

You may qualify for weekly unemployment benefits if you were let go, furloughed, or had your hours significantly reduced. While the process for the application itself is quite simple (you can apply online, by phone, or in person), it can take several weeks for your application to be approved and so that you can start receiving payments, so it’s best if you file your application as quickly as possible.

Severance packages

If you were laid off, your previous employer may offer you a severance package. This is usually a lump sum payment that is based on the amount of time that you worked for the company. Severance pay is not guaranteed, and these packages vary from company to company and are not protected by law. You can usually find the details of your specific policy in your contract of employment, employee handbook, or in the paperwork provided during your exit interview.


Put Your Savings into a High-Yield Savings Account

If you have not done so already, transfer your savings into a high-yield savings account (HYSA) ASAP!

A HYSA is just like any other savings account, but it allows your money to earn more interest than in a traditional savings account— like, a lot more! In other words, letting your savings sit in a HYSA allows your money to grow more quickly than in a traditional savings account and work harder for you, all without any additional effort on your part.


Review Your Budget

As quickly as you can, set aside some time to review your current expenses. If you already keep a monthly budget, this is the time to make some adjustments. If you don’t already have a budget, this is the time to start.

I know that this step can feel overwhelming, stressful, or even scary, so I want to give you permission to make this process as enjoyable as possible. Put on some comfy clothes, pour yourself a glass of wine or cozy up with a cup of tea, put on some relaxing music, and prepare for some quality one-on-one time with your budget.

Start by identifying your essential living expenses. These should include payments like rent/mortgage, food, utilities, insurance, etc. Once you have identified the costs of these expenses, write them all down and add them up to find your essential cost of living. This is the absolute minimum amount that you need to plan on spending each month to survive.


Identify Where You Can Save

Once you have established your essential expenses, you can look at your additional areas of spending and identify where you can make adjustments to save money. Now, I don’t want you to feel like you have to cut out every expense that is outside of the essentials, as these are often the areas of spending that bring you joy and a sense of fulfillment. But, there may be certain subscriptions or recurring purchases that you may be able to get rid of—even just temporarily put on hold—during this season to save a little extra money.

Another way to save money is by adjusting your membership level or subscription package to a more affordable option. For example, Ladder allows you to update your life insurance coverage level at any time to provide you with quality coverage at a rate that suits your current financial situation.

It’s important to be both realistic and sustainable with this process, as you may have to operate on this budget for some time as you navigate the job market. Sure, slashing your food budget to just $100 for an entire month sounds great in theory, but the reality is that living off of beans and rice day in and day out is not an enjoyable or sustainable way to live, despite what any other financial educators may tell you.

Additionally, you want to make sure that you are not cutting expenses that you will come to regret later. While saving an extra $50 a month may be tempting, doing so at the expense of losing your life insurance policy is not worth the risk. Insurance, important car repairs, therapy appointments: certain expenses are worth keeping as they promote your overall health and well-being.


Negotiate Your Recurring Expenses

Every year like clockwork, I call all of my utility providers to negotiate my rates. The result? A few hours of my time and an extra $1,200 in my pocket, every year.

That’s right: services like internet, cable, phone, car insurance, and more can all be negotiated when you have the time, patience, and know-how.

So, how do I successfully negotiate down my recurring expenses? Here are my top tips:


First and foremost, be respectful.

The process of negotiating can be time-consuming and a little draining, but do your best to keep cool and kind with your service representatives. Not only will this increase the likelihood of securing a discount, but it will also make the negotiating process much more enjoyable for everyone involved.


Be patient.

Negotiating down a utility is rarely as simple as just asking for a discount. If it was, everyone would do it. This process can take a little bit of time; you may have to speak with multiple people, sit on hold, and have the same conversation over and over. Be patient.


Be persistent.

You may not have success negotiating your utilities down the first time you try. Be persistent with both your utility providers and yourself – call back regularly over a few days; adjust your approach each time and learn as you go. It may take a few calls and a bit of trial and error, but honing your negotiation skills will serve you well for decades to come.


Reach Out to Creditors

Even as you look for areas to save money, it’s important to make sure that you are still prioritizing making payments on your debts to not damage your credit score or rack up any more interest than is absolutely necessary.

Fortunately, during the pandemic, many banks and lenders introduced relief policies to help borrowers during seasons of economic difficulty or job loss. Calling your lender’s customer support number can allow you to speak with a representative that can give you the details of their relief policy, if available. The options available will vary depending on the lender, but they may be able to temporarily pause your recurring payments, pause the interest on your balance, or reduce the frequency with which you are required to pay. 


Use Your Emergency Fund Strategically

I always make a point of stressing the importance of your emergency fund, and this is exactly why: when an emergency arises, it is so comforting to know that you have something to fall back on. If you have an emergency fund, this is your time to use it so that you don’t have to drain your savings or reach for credit cards.

After you have identified your essential expenses, found areas to reduce spending, and minimized monthly payments through negotiating and reaching out to creditors, you can effectively estimate how much you can anticipate spending each month, and then compare the total of your budget to the amount in your emergency fund. This way you will be able to determine just how long your emergency fund will last so that you can use it as strategically as possible.

Pro tip: if you haven’t done so already, make sure that your emergency fund is in a HYSA so that it can continue to earn higher interest than in traditional savings accounts! Keep in mind, though, that if you are pulling from your emergency fund to pay for everyday expenses, you need to plan for the 2-3 days that it will take for the funds from your HYSA to transfer to your checking account.


Set Yourself up for Success after You Land a New Job

Congratulations! All your hard work and persistence paid off and you landed a new job and are ready to put the bare-bones budget of your job-hunting days behind you…but, you’re not quite done with it just yet.

I know how easy it is to settle into a new job and immediately jump into spending mode, but the first few months of working a new job should be strategically used to recover from any financial setbacks you may have encountered during the job hunt.

As you reenter the workforce, make sure that you prioritize rebuilding your emergency fund in a HYSA. You should aim to have 3 to 6 months' worth of living expenses saved in this fund. Heaven forbid you have to dip into it again so soon, but it’s better to be safe than sorry.

Additionally, if you took on any high-interest debt during your job search, you should also prioritize paying it off as quickly as possible to minimize interest and improve your credit score.

I know that losing your job can make you feel like so much of life is out of your control. But if you follow these steps, you can navigate the job hunting process with confidence knowing that you still have control over your finances.

You’ll get through this season, and when you do, you’ll have developed an invaluable set of budgeting skills that will serve you for years and decades to come. Whatever life throws your way, you’ll have the financial skills, know-how, and resources to navigate it confidently and successfully.


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