Are you concerned about your income taking a hit? Here’s what to do next.
7 ways to navigate a job loss or drop in income
If you’re worried about a potential job loss or drop in income, simple things, like paying bills and saving for the future, can suddenly feel overwhelming. To keep your budget intact, consider these smart financial moves.
What to do now
Create a new monthly budget
If you’re facing income loss, reassess your household budget. The first step in creating any budget is to list the money you expect to have coming in or already have in emergency savings. Next, review your expenses and categorize them into bills you must pay and areas in which you can cut back. A retooled budget can help you simplify your costs and reveal ways to save.
Assess your health insurance
When you lose a job, you often lose the insurance offered by the company, too. It’s a good idea to address any immediate health concerns while you’re still covered so that if you can’t afford your own policy later, any issue you may have doesn’t turn into a major expense. If you’ve lost your job, try to quickly replace your health care plan—either through COBRA or a family member—so that should any medical emergencies arise, you’re financially covered.
Consider other sources of income
Landing a new full-time position can take time, especially if you’re thinking about changing career paths. If you’re concerned about job or income loss, consider taking on part-time or gig work—it can be a great way to earn extra money or learn a new skill while you search for a new role. Before you do, however, it’s important to understand all the benefits and trade-offs that can come with the gig economy.
What to do right after a job loss
Collect final payment and file for unemployment
If you’ve lost your job, ask your employer about your last paycheck and how you will receive it. Then look into your eligibility for full—or partial—unemployment benefits. The U.S. government’s passage of the CARES Act in 2020 has made it easier and faster to file for unemployment.
What to do within 30 days of income loss
Explore emergency cash options
It’s always a good move to put some savings into an emergency fund for when you might need it. However, if you’ve unexpectedly lost some or all of your income and don’t have savings to tap into, figuring out the best way to cover day-to-day expenses can be stressful. Before you borrow cash for an emergency, it’s important to carefully weigh your choices—and the risks that come with different options—so that you can make sure you secure the best possible terms for your situation.
Reach out to companies you owe
Even with the best planning, sometimes a job loss can suddenly make it hard to make ends meet. If you’re struggling to pay down debts or monthly bills, consider negotiating with your creditors to see if they can adjust the payment terms on your account to get to an amount that will be more manageable during this time.
Restart on the right financial foot
Landing that next job may offer you a sense of relief. However, there are still some basic things to handle, such as direct deposit forms, insurance coverage, retirement plans and Flexible Spending Accounts.