How to Prepare for Job and Income Loss
In the wake of the COVID-19 pandemic, many Americans now find themselves without work, with reduced income, or with no income at all. Approximately two-thirds of Americans say their personal finances have been impacted by the coronavirus, and 48% are worried about potential medical bills. The sudden loss of a job or income can be stressful and unsettling, but there are some steps you can take to protect yourself moving forward.
Immediately Reduce Your Spending
Whether you have already lost your job or you are worried about future work reductions, it’s time to reduce your spending. Put yourself on a budget and commit to only buying necessities at this time. Cook from home as often as possible. Consider canceling some of your monthly subscriptions. These micro-debts could add up to a contingency fund for the future.
If you’re worried about stockpiling the essentials, use the “1 for now, 2 for later” rule. Let’s say you need frozen broccoli for a recipe. Buy three bags total – one for now, and two to eat with future meals. This allows you to slowly build up a stockpile without over-spending or over-purchasing.
Save the Money You Would Have Spent
Now that you have extra money available, save it! Put as much away as you can to prepare for the months to come. Fifty dollars here, twenty dollars there – every bit of savings counts. If you have a cash back credit card, use it to make your necessary purchases. Then convert the cash back into savings. You can boost your cash back even more with apps like iBotta, Rakuten and PayPal’s newly-acquired browser extension Honey.
File for Unemployment after Job Loss
If you have officially lost your job, file for unemployment benefits. It may take several weeks to receive your first payment, depending on your state’s regulations. Unemployment offices are overwhelmed with requests at this time because of the national crisis. Be patient, remain diligent, and educate yourself about the process.
Explore the Forbearance Programs Available to You
Most service providers, lenders and credit card companies have programs in place to assist customers during financial hardships. These programs may allow you to skip a monthly payment, waive fees or interest for a brief time, or temporarily pause service until your finances improve. Explore your options, but don’t commit to anything that may damage your finances in the future. Just because you can increase your credit line doesn’t mean you should. If you feel you do need an additional line of credit during this time for an emergency, feel free to take a look at our credit card options.
Check out our list of credit card companies offering relief during the coronavirus outbreak.
Find Other Sources of Income (Work-from-Home Jobs)
This tip applies to people who have lost their job, who may lose their job, or who have reduced income. Think of other ways you could make money. Do you have unwanted items you could sell? Could you get a side job to supplement your income? Are there work-from-home opportunities that align with your skills? Now is the perfect time to tap into your talents and explore new ways to earn money.
Start Your Job Hunt Early
With the current state of the job market, it may seem like a silly time to look for work. However, there are still employers hiring during this time, especially those who offer essential products and services. At a minimum, you will need to complete job searches to comply with most unemployment laws. Familiarize yourself with the job-hunting process. Update your resume, and spend some time crafting the perfect cover letter. The work you do now will pay off in the end, even if it takes a while to see the outcome.