Losing a job is one of the worst things that can happen to anyone. Most of the time, it is very unexpected, at catches us unawares. While a job loss can adversely affect your life, your finances are usually affected the most. However, you can get back on your feet in no time with these budgeting tips.
Why Budgeting is Important After Job Loss
If you have just lost your job, you may not see the need to do anything different. However, it is important to make budgeting a huge part of your life so you can survive while you look for a way forward.
Even if you have some savings, budgeting will allow you to make the best out of what you have while you try to get another income source.
Budgeting Tips After Job Loss That Work
Whatever the reason for your job loss, these budgeting tips will help you to plan your life with the limited resources that you now have:
1. Prepare a new budget
If you already have a budget, you will need to revise it to cater to your new situation. If you do not have a budget, come up with one that also fits your new situation.
First, figure out how much money you have now and how long it may last for you to get another job. It will make it easier to create a new budget that works for you and that you can stick to. It should be a bit leaner so that you do not use up all of your money.
You can use a budgeting app, a planner book, a spreadsheet as long as you have a way to keep track of all your monthly expenses and any income. There are many budgeting apps on Android and iOS platforms to try. Some are free, and others are not. Since you have no steady source of income, it would be wise to start with a free budgeting app.
2. Deal with the essentials
A job loss will take a toll on your finances, so you first need to figure out what the essentials are and cater to these first when budgeting.
These will mainly include food, shelter, clothing, transportation, and utilities. If you’re paying off a debt, you also need to add this to your monthly budget. Knowing all this and how much you spend on the essentials is one of the budgeting tips that will help you stay on track with your finances.
“The basic thing with frugality is: if you can’t afford it, don’t buy it.”
3. Cut out all unnecessary spending
Anything that is a want and not a need at this time is unnecessary spending. Needs are the essentials and basically what you need to survive as you look for another job. Wants are things you do not need in life to survive.
The high phone and data plan, the cable bill, the tendency to eat take out all the time, and buy unnecessary fashion items. All these are ideal in making your life more comfortable. But if you can survive without them, you do not need them at this point in life. If you can do this, you will have a chance to save money that can push you for a few more days or months while you look for another job.
Related read: Discretionary vs Non-Discretionary Expenses Explained
4. Save some more
While you may no longer have a regular income source, it is quite easy to make some savings with the money you already have.
One of the ways to do that is by buying your essentials in bulk. This way, you’ll be able to get things at wholesale prices and have them last longer. You can also purchase food and other household items using coupons or watch out for what’s on sale.
When it comes to food, you can create a weekly meal plan to know what you are going to buy and how much it will cost.
You can also save on utilities by making sure you unplug items and turn off light bulbs when not in use to save on the electricity bill. Your water bill will also be less if you take care to turn off the taps when not in use and use water sparingly.
One other area that could save you a lot of money is where you live. You should evaluate your living situation after a job loss to determine if you need to move to somewhere less expensive, as per your new budget. If you don’t want to do that, you can rent out any extra space in your house for some extra cash. You can also move back home, if possible, or move in with a friend to cost-share the expenses.
5. Find ways to make money
If you already have a side hustle, the better for you. You can use the money coming in from our side hustle to cater to your monthly expenses. That way, you do not have to use your savings or final dues to survive.
For example, I am using the money I am making from my side hustle to pay for monthly expenses, although I had already set aside some money to survive. For now, that money will still be part of my emergency kit. If there is a month I do not make any money, that money will be there to pay for those expenses.
If you do not have a side hustle, try looking for something that will generate some money. There are tons of online jobs that might suit you, like transcribing, article writing, doing online surveys, and online customer care jobs.
You can also turn your hobby into a money-minting machine (it might take time to earn thousands or millions from it, but for now, it is your money-minting machine). There is a thread I read on Twitter the other day, and it uplifted me. I even shared it with my friends who are wondering what to do in case they lose their jobs. It made me realize that the ideas I am sitting on, scared of what will happen, could turn into a long-term business. I mean, what do I have to lose; I already lost I job I thought might last for long.
Related read: Debunking Myths About Side Hustles
A job loss can be very devastating for several reasons. I have been there; I know it. However, with these few budgeting tips, it is possible to be jobless and still survive while you look for another job or build your hustle into a full business.