Losing a job can be a nightmare situation. The confusion and stress can be massive. Therefore, when you think about the possibility of this happening, it is uncomfortable. However, the covid19 pandemic has exposed the global economy to a recession. As a result, the possibility of losing a job is high. You then might wonder how you will be able to cope financially with a lost job.
When you lose your job, it means having a lesser amount of money coming into your home. The prospect of losing your home and not being able to provide sufficiently for your family looks real. It’s easy for you to fall into despair when you find yourself in this situation. This might affect your confidence and motivation negatively. But do not despair because you can cope financially with a lost job.
How you can cope with a lost job
1. Do Not Panic
The first thing you want to avoid is getting into a panic mood and make decisions in haste. Take a step back and breath, let the reality sink in, but don’t dwell on it. You should keep your mind positive and stay clear of depression, as your state of mind is vital to your rebound. Surround yourself with positive-minded people who can give you the needed support while looking for your next job.
Your facial expression or attitude can have a significant impact on your family members, especially your kids. You want to show them that losing your job is not the end of the world. On the other hand, it might just be a chance to get a better job or start a new career. When you panic, it will spread fear in your home, but a calm attitude can help your spouse or kid to display the right attitude and support.
Meanwhile, you don’t want to be in denial and hide the situation from your family. Moreover, it would be best if you let go of any anger, as this can deter you from taking the necessary step.
2. Sort Out Your Income And Benefits
Firstly, you want to know the total of the exact income your family has. Therefore, you need to check for all the sources of income and entitlements available to you and your family. This may include the following
- Severance pay: If your job was terminated or you’ve been laid off, you might receive a severance package that includes pay and some other benefits.
- Unemployment compensation: This is a benefit paid to people who recently lost their job through no fault of theirs.
- Interest from saving accounts
- Dividends from investments
- The income of spouse/children
- Tax refunds/credit
- Insurance: Some insurance policies, such as short-term income protection, will replace a part of your income for a fixed period when you lose your job. Also, if you have a cash value life insurance policy, you may be able to borrow money from it, if needed.
Next, make a list of all the bills you’re in charge of paying, and contrast that against your income. Subsequently, this information will help you to know what you have and plan a budget. See if you can rent out a bedroom or suite to earn extra money.
3. Check Your Debts
You most likely have some debts and bills that you make payment for regularly. You should make a list for this, a spreadsheet or even a handwritten list is good enough. Take note of the debts that are of priorities, such as mortgage or rent, council tax, gas, and electricity bills. It’s important to focus on the bills that are of utmost priority and sort out how you’re going to pay them.
Meanwhile, if you have debts on credit cards or loans, check if you have payment protection insurance. If there is, you should claim it straight away. When making your list, include the name of the lender, the total balance, the minimum payment, and the due date. Putting this data together will give you an overall view so that you can make a plan and budget.
4. Make Your Budget
If you don’t have a budget, now is the time to make one. If you have one before, you must have made that budget based on your previous income. As a result, you need to trim down your old budget or make a new one.
Try creating a weekly or monthly budget with categories for bills and other necessities like housing and groceries. This can help you think through how much money you can spend on each item. Do not forget to include additional expenses that would entail your job search.
Stop direct payment of bills from your account, so you can be flexible in deciding which bills to pay. Also, discontinue automatic payments into investment accounts and college savings. Consider these cutting expenses below to help you trim your budget.
- It would help if you cut down spendings on luxury items like jewelry and expensive gifts for your kids.
- You can cancel subscriptions on cable, magazines, and online streaming. Or you can limit subscription just to one alone.
- You can cut bills on utilities by turning off the light, and air conditioning. Also, you can keep the heat turned down.
5. Take Up Part-Time / Freelance Jobs
It might be difficult for you to get another job right away. But it is possible to get a part-time job or take up freelance offers. You can consider online jobs like teaching, writing, or consulting. If you have any employable skills like plumbing and carpentry, you need to use them and earn some money.
6. Do Repairs And Maintenance Yourself
Since you will have more free time, you can fix things yourself at home instead of paying for the services. You want to clean the house, cut the grass, and do the gardening, paying for help will only increase your expenses which you want to avoid. Doing repairs and maintenance can also ease some stress on your bills.
7. Get Your Kids Onboard
It is important to get your kids onboard this trying time. So they would prefer for you to tell them about the situation. For little kids, you might state only the facts. For example, you may say, “I don’t have a job for now, and we’re going to try saving all our extra money till I get another.”
For older kids, you might reassure them that you will all try to work through the situation together. Moreover, you want to be honest about the changes that will be required by the family.
Although it may take more time than you expect to get another job, making the necessary change and choosing the right step will go a long way to ease the difficulty of the situation. Taking a record of your income and your expenses will help you to plan, which is vital for you to be able to cope financially with a lost job.
Nanna Daniels is a legal practitioner and writer. His practice as a lawyer and a writer is as diverse as his client base. His client ranges from government bodies to banks, private companies in real estate, energy companies, telecommunications to small businesses, families, and individuals.
He is a passionate and diligent analyst of family, sports and business concepts, providing in-depth knowledge and analysis. He has covered topics ranging from family, parenting to entrepreneurship.