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Are you afraid of losing your job? Recently, over 15 million people have lost their jobs or taken pay cuts. Losing your job is emotionally and financially traumatic. It is not the best of times in the United States right now and more job loss is likely. If you see signs of being laid off or furloughed, it is time to take steps to protect yourself from major financial issues.
1. Review all Liquid Assets
Take the time now to review all your liquid assets (bank account balances, emergency funds, and other cash equivalents like CDs). These are assets that are easily available during an emergency. The goal is to know what cash can quickly be made available in an emergency.
Recognize that liquidating retirement assets take time and there are significant penalties. Know the value of these assets, but these should be used as a last resort. Additionally, don’t include items like your house or car in this assessment. These assets usually cannot be converted to cash quickly.
2. Conduct a Benefits Review
What company and government benefits will be available to you, if you lose your job?
Benefits to consider:
Vacation Time Payout
Insurance Coverage (how long)
Unemployment Eligibility – Remember that some states are giving partial unemployment if your pay was cut. It is worth checking out.
3. Develop an Unemployment Budget
There are plenty of how to create a budget articles. Here is a link to free worksheets to help create a budget.
Remember that an unemployment budget is temporary. This budget should only last 6 months maximum, so do not panic when expenses are greater than income. This is to be expected and we will address how to bridge.
When creating the budget, here are few tips.
Determine your income streams
Income streams should include spouse income, passive income, unemployment, severance and a portion of your liquid assets.
Write down all expenses
Don’t forget any new expenses like medical insurance. Also, there is currently student loan deferral programs, so this expense might be an expense that can be reduced or eliminated from your unemployment budget.
Be realistic about your expenses. Will your gas usage be the same if you are unemployed? Are you going to order food out as often? Will you go on a vacation? The answer is probably no to all the questions above.
4. Build Your Emergency Fund
Most likely, the concept of losing your job is awful enough. After reviewing the unemployment budget, there is probably additional horror. I get it. The good thing is you are afraid of losing your job, but you have not lost your job yet. There is still time to build your emergency fund.
There are two primary ways to build your emergency fund (1) slash your current budget to save like crazy, and (2) make additional money now.
Slash Your Current Budget
Consider living by your unemployment budget. Give it a test run. Additionally, find ways to save money to build that emergency fund. Here are 60 Money Saving Ideas During a Quarantine that focuses on saving money while at home.
Don’t start saving by cutting dryer sheets in half. Instead, look at big-ticket items like car and home insurance, refinancing your mortgage, and calling creditors. Get the most bang for your effort.
Increase Your Income
For some, your pay may have already been cut and overtime stopped. It is time to increase your income in preparation for losing your job.
There are still part-time jobs available
Many people are looking for jobs, but some local part-time jobs continue to be in high demand. Fewer people are looking for part-time work. With unemployment benefits being enhanced, it is frequently better to accept unemployment payment than take a part-time job.
The big job search engines are always a good starting point. However, word-of-mouth advertising and job posting on storefronts are common right now. So look local but also don’t forget to check the next town over, especially if the town is wealthier.
5 Frequent Part-Time Job Openings
Grocery stores – clerks, shopping order pickers, and night restocking jobs are still being advertised
Shoppers – particularly for groceries
Warehouse Workers – due to increased online orders
Truck Drivers – this is continues to be a high demand job
Start Developing Streams of Passive Income
As a financial website, it would be an easy step to recommend developing dividend income. However, this is not something that would be recommended at this time due to the uncertainty in the stock market and the need for very liquid assets.
Instead, start optimizing passive streams like credit card rewards and other potential avenues of small cash sources.
5. Prepare for a Job Search
This is the time to start taking steps to prepare for a job search. Non-aggressive job search preparation include:
1. Cleaning up your social media accounts. Make sure everything looks professional.
2. Updating your LinkedIn profile.
3. Start quietly networking with others in the industry.
4. Update your resume.
5. Look on job search sites for jobs related to your field. This will give you a feel for the difficulty in finding a new position.
6. Determine if you need to evaluate a new career. Be honest with yourself. If you are in the restaurant industry, it may be a long time before the industry completely recovers. Things like tips will be impacted. Can you wait out the recovery?
7. Evaluate your certifications and training. Are you updated on all required certifications? Can you get those completed now?
These are difficult times. It is important to protect yourself financially and trust your gut. The economic and job outlook will improve over time, but the problem is time. If you are afraid of losing your job, it is easy to despair.
Take this time to take control of your situation and better position yourself for a brighter future.
As a recap:
1. Review all liquid assets
2. Conduct a benefits review
3. Develop an unemployment budget
4. Build your emergency fund
5. prepare for a job search
If unemployment seems all but a certainty, start reading up on ways to survive unemployment. Below are few more good reads that will help you during these times.
Remember to stay positive.