People who have lost a job more than once become experts at the art of juggling financial responsibilities. If this is your first time, your reactions can range from bravado ("Why do I need to clip coupons? I'll have another job long before my severance pay runs out") to panic ("Oh, my God, we'll lose the house!"). In truth, neither reaction makes much sense if you're out of a job. With a little creativity, you can juggle your responsibilities and, depending on how much you may have in savings, buy yourself at least a year, which is more than enough time for most people out of work.
Regardless of the severance agreement you negotiate, financial concerns inevitably surface when you are out of work. The fact that there may be other people depending on your income, such as a spouse, children, or aging parents, compounds your concern. The easiest way to deal with your immediate concerns is to get a clear picture of your current financial situation. If you aren't an organized person when it comes to finances, losing your job will certainly help you focus more on what you earn, how you spend your money, and how you control both. It may seem like learning the hard way, but many people say that losing a job has helped them focus on saving more money, wasting less, and reducing or eliminating debt.
The first step in gaining control is to put it on paper, making a budget. If you already keep reasonable account of your income, debts, and expenses, a large part of the process is already finished. In that case, you need only prioritize your debts and expenses to ensure that the most important bills are paid first, things that can be put off are delayed, and you don't severely damage your credit rating in the process.
For many people, the idea of doing a budget is about as appealing as having a root canal. You probably don't lie awake nights thinking, "Gee, I ought to do a budget." More likely, you know "approximately" where the money goes. The important part about being laid off is that you need to know where all of it goes. Because there may be no immediate end to your current situation, you need to conserve every resource. Financial planners say that when most people are asked to show how they spend their money, they are typically unable to account for at least 25 percent of their income. That kind of money definitely comes in handy when you're short one income.
The budgeting process itself is relatively simple. You make a list of everything you buy or owe and determine how much money you spend on each item. When you add your expenses, the total should be something less than or equal to your income.
The problem is, if you have already read the article on unemployment compensation, you know that once your severance pay runs out, your income will be significantly less than it was when you were employed. And, unlike the federal government, your budget has to balance.
Obviously, something has to go. The point of the rest of this article is to help you decide what to keep in the budget, what to delay, and what to delete altogether. The key to a successful unemployment budget is to plan to be out of work for at least nine months to a year. According to national averages, you probably won't be looking that long, however, your plan should give you more time than you'll need so that you can ensure your family's financial security.
