Facing unemployment can be an incredibly intimidating and overwhelming experience. Adjusting to the reality of life without a regular income can be difficult, and budgeting between jobs can feel like an intimidating challenge.
Budgeting between jobs doesn't have to be hopeless. With the right strategies in place, you can not only stay afloat financially but come out of the period in good shape. Here are a few key tips for budgeting and managing money while you're between jobs.
Asses Your Financial Resources
The first step to budgeting between jobs is to assess your financial resources, such as any savings or investments that you may have. This is necessary for determining your budget and allows you to have a realistic view of how much money you have available.
If you're lucky enough to have sufficient funds in savings, you can take solace in the fact that you have a financial cushion to soften any financial blows during your period of unemployment. However, if like many this cushion is not present, it might be beneficial to set up any other sources of income that you may have access to. This could include income from rental properties, payments from investments, or regular pay from a previous job.
Prioritize Expenses
Once you've identified your resources, you can start to craft a budget for yourself. The key is to prioritize your expenses to determine how you will allocate your funds. This approach can help ensure that you make the best use of the money you have available in order to manage paying for necessary items and minimizing frivolous spending.
Some things that you will likely need to prioritize include housing, transportation, food, insurance bills, and any medical expenses. Establishing a budget is an exercise in prioritization, as you will likely need to compromise on certain items in order to ensure that you cover your necessary expenses.
Develop a Savings Plan
Developing a long-term savings plan is also essential. While it can feel like saving money is the least of your worries when you're between jobs, taking the time to think long-term can be the difference between peace of mind and a crisis.
Having a financial plan can help you build up a cushion of savings that you will be able to lean on in the future. At the very least establishing a savings plan will likely save you from knee-jerk finance decisions that could come back to haunt you down the road.
Utilize Automation
Automation can be your best friend when it comes to budgeting between jobs. Scheduling automatic payments ensures that you don't miss any due dates and helps to develop and maintain a budget for both necessities and wants. This approach can also help you minimize the stress of keeping track of bills and payments while you're juggling multiple tasks related to your search for employment.
Take Advantage of Public Services
Don't be afraid to take advantage of public services if you need them. There are now a wide variety of benefits provided by the state and federal government that can help to cover some of your essential expenses.
Local programs and grants may be available to help cover the cost of rent, food, and medical needed. It's also important to do your research to find out if your state or city offers any specific benefits for increasing employment opportunities.
Monitor Spending
Finally, it's important to keep tabs on your spending during this period. Naturally, anxiety and stress can lead to an increase in spending, both necessary and unnecessary, so staying aware of your spending can help you stay within your budget.
One way to do this is by tracking your transactions and reviewing them regularly. There are a number of apps and online resources to help with this. By taking the time to monitor your spending, you'll be better informed on what items you may need to cut back or eliminate in order to stay on track with your budget.
Budgeting between jobs can seem like a daunting process, but with the right strategies in place, you can make it through to the other side successfully. By taking the time to assess your financial resources, prioritize your spending, develop a long-term savings plan, take advantage of automation, use public services, and monitor your spending, you will be well prepared to weather the financial storm while searching for new employment.