For many, there’s nothing more terrifying than unemployment. Due to a recession, health issues, performance inconsistency, or other reasons, losing your job can be incredibly stressful, especially if you have little or no backup to manage your finances. Maintaining your financial health during this period is key to survival. However, just cutting expenses might not fix your woes. You might have to explore assistance programs like unemployment loans.
Unemployment affects thousands of families and individuals every year. Thus, effectively learning to get through this period could help you come out on top. In this post, we’ll share some practical steps you can take to stock your situation and manage your finances when you’re employed.
3 Ways to Manage Your Expenses While You’re Unemployed
Monitor Your Expenses
You have limited money to spend. Monitoring your expenses will help you constantly monitor where your money is going and control the flow. The easiest way to do this is to use a budgeting tool to organize and prioritize your spending. For instance, many unemployed people like to separate essential and non-essential expenses.
You can do this too by making a list of all your income sources (if any) and your savings and anticipate how long you can manage with that amount. You can simplify the decision-making process by trimming and prioritizing your spending every month.
For example, you can employ the 50/30/20 rule with 50% of your monthly budget preset for your physiological needs (rent, groceries, gas, etc.). You can leave 20% for emergency expenses, such as hospital trips or car repair. The 30%, which most people usually set for extras like entertainment, recreation, and luxuries, is the area you’ll have to trim down the most.
Look into New or Temporary Income Sources
Just because you’re looking for full-time employment doesn’t mean you can’t explore side gigs, part-time jobs, or temporary work. In these situations, it’s not even about getting a job related to your field of profession, education, or experience. It’s about survival. In today’s ever-shifting economy, you might have to explore multiple side hustles to manage your expenses until you get a stable job.
The modern business landscape is rapidly shifting towards the gig economy, with freelance work, independent contract positions, and remote jobs storming the market. So, if you have skills, such as content writing, graphic design, and software development, you can opt for freelance sites and work for temporary clients.
Consider Taking Out a Temporary Unemployment Loan
Most people say you shouldn’t rely too much on unemployment loans. However, these temporary loans can bridge a short-term gap between your income and expenses when you have limited options and bills to pay. So, you shouldn’t be afraid to seek out this lifeline if you need it. However, just like managing your finances, you should avoid biting off more than you can chew. The last thing you need is a deeper financial rabbit hole to climb out of.
Loans for unemployed people aren’t challenging to qualify for in this day and age. Most conventional lenders make you believe your ability to get one depends on your employment status. Lenders simply want assurance that you can pay back the borrowed amount and will consider other sources apart from a job paycheck, including:
- Child Support
- Unemployment Benefits (if any)
- Disability Payments
- Rental Income
- Investments, such as stocks or annuities, etc.
Read more: 15 Long Term Benefits of a Personal Loan
If you don’t have a steady income, many lenders can offer loans with collateral, also known as secured loans, to reduce risk. This way, you can borrow the amount you need while keeping something valuable as collateral if you can’t pay the loan back, including your car, house, savings account, shares, etc.
With an unemployment loan, you can manage your monthly finances, such as rent, groceries, utilities, prescriptions, gas, mortgage, etc. Most lenders expect you to repay your debt on time irrespective of your job status. Otherwise, your credit score could take a huge hit and put you at high risk when applying for future loans.
And there you have it – three simple yet effective ways to manage your expenses when unemployed. Indeed, there are other ways to survive, such as low-interest credit cards, borrowing from family or friends, local non-profits, and food stamps. However, the options in our list put you in the driving seat of your finances and make you more self-reliant.