Pink Slips: Budgeting While Unemployed

It arrives when unexpected – a call or email from the manager’s office leading to a clearing of your desk. You’re now unemployed, and it causes momentary panic as hundreds of questions circle your brain. How much will your unemployment benefits be? How will you feed your family? How much savings will you need to use? It can all lead to some tense moments as you head home. Yet, there are ways to survive and budget while unemployed. Here are a few tips to ease your nerves.

Obtain Unemployment Benefits

The first priority is to apply for unemployment benefits. What you receive depends on how much your gross income is over a certain period of time. Generally, calculations for weekly benefits are made by taking four percent of the highest paying quarter for the year prior to when you were let go. For example, if pink-slipped in April of 2013, calculations are made starting back in April of 2012. Estimates may differ depending on the state you live or work in.

Eliminate Unneeded Expenses

When you know how much your benefits will be, you can begin to determine a working budget for your family. Start with dividing the benefits into the necessary expense categories – food, utilities, transportation, and rent/mortgage. If necessary, utilize monies from the emergency fund or savings account to supplement. This is also when you need to eliminate any unneeded expenses that may cut into your weekly distribution of benefits. For example, suspending cable or video on demand services like Netflix, eliminating funds for dining out or movies, halting memberships to gyms or other clubs. A cleaner outlook of the pared-down budget should emerge when these expenses are removed.

Speak to Credit Lenders

One of the biggest headaches when unemployed is dealing with financial institutions where your loans and credit cards reside. While organizations like Sallie Mae offer deferments and forbearance on payments to their student loans, private institutions may not be as charitable. However, conversations with these lenders should be initiated as soon as possible to inform them of your economic situation and determine what, if any, options are offered in these situations. Though it isn’t an optimal solution, some loans and credit cards may need to go to collections until your economic situation stabilizes. The exception to this is auto and home loans – don’t let either of these lapse to avoid foreclosure or repossession.

Plan Ahead

The best thing to do when dealing with unemployment is plan ahead as much as possible.. Besides setting up an emergency fund ahead of time, prepare meal lists and cut coupons while without a job to prevent overspending at the market. In addition, try to calculate the amount of miles you’ll drive in a particular week to determine how much you’ll need to pay for gas. If you knew of necessary repairs prior to losing your job, see if they can be fixed now to halt worry of how they’ll be paid for later. By taking time to complete these tasks you will free yourself of frantic worry, allowing you to focus on the search for a new job.