Losing your job is an overwhelming experience. You have to deal with the emotional and psychological fallout of being let go. And you also have figure out how to survive financially until you land a new job.
National Treasury director general Dondo Mogajane said the country’s unemployment rate could reach 40% due to the impact of the coronavirus pandemic.
There are some budgeting tricks that even the most budget-averse can use to stretch their rands after a job loss. Here are some tips that can help you handle your finances while unemployed.
Apply for Unemployment Benefits
Before you sit down to adjust your budget, make sure you apply for unemployment benefits.
If you have accumulated you are entitled to unemployment benefits for up to 34 weeks. The application for unemployment benefit must be made within 12 months of the termination of the contract.
Unemployment benefit of 38% to 60% of average earnings in the last six months. This is depending on the insured’s period of service and level of income, is paid for up to one year. The first 238 days of benefits are paid at the income replacement rate set under the law (38-60%). And the remainder of credits is paid at a flat rate of 20%.
See How You’re Spending Your Money
When you have a reliable source of income, it is easy to ignore where and how you spend money. You know your major expenses are covered and another paycheck is coming soon.
Well, now is a good time to really examine how you spend your money.
Go through your bank account and review your expenses for the last 60 days. Next to each purchase, you can write whether it’s “essential” or “not essential”.
Focus on paying the essentials first.
rent or mortgage
heating and electricity
Once you’ve gone through all your expenses, write on a separate piece of paper all the essential expenses. That should be your main budget right now.
Lastly, add up the cost of all your essentials. This will be your bare-bones budget that includes all the things you need to live.
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Prioritize Your Debts
If your survival budget still leaves you in the red, you’re going to have to prioritize your debts. This is going to require some painful choices.
For example, you may have to surrender your car to keep your house. On the other hand, you may have to apply for bond payment holiday, giving you breathing room up to 3 months. Sometimes there are no easy choices.
One way to conserve your available cash is to make only the minimum payments on your credit cards. You may wind up having to roll over balances and pay interest charges. The idea is to keep your balance as low as possible and avoid using your cards as much as possible.
Negotiate With Your Creditors
If you can’t meet any of your financial obligations, you need to contact your creditors. Explain your employment situation. See if you can negotiate reduced interest charges or a deferred payment schedule.
Some creditors may work with you and lower your payments. Some may not.
Find Part-Time Work
Once you cut your budget to the bone, you might be surprised how far a part-time job can carry you while you shop for full-time work. You might not want to turn waitressing or bartending into a career, but it could help you get by.
Another option is to connect with local temp agencies. You may be able to find better-paying contract or part-time work in your actual field of expertise. These jobs may turn into actual long-term, full-time employment.
Alternatively, look for ways you can use the gig economy to your advantage. For instance, if you have a decent vehicle, you could drive for Uber.
You might be surprised to find you love your part-time work, and it could turn into a new career. But even if that doesn’t happen, earning as much money as possible now will get you through this period with fewer financial scars. Plus, these options give you new ways to diversify your income. This is one of the best ways to hedge against future job uncertainty.
Just remember: the goal should always be to wind up with steady, full-time work. So don’t let your part-time jobs get in the way of applying for jobs and tackling interviews as often as they come!
Be Prepared for Next Time
Hopefully you already have an emergency fund when you get laid off. If not, once you’re back on your feet, immediately start preparing for the next possible emergency. If you haven’t already, save up three to six months’ worth of expenses in an emergency fund.
Even if it takes you more than six months to find another job, you can often stretch that savings and a part-time job to a year or more. As soon as you can, start saving money again for the next emergency.
Losing your job is never fun, especially when you don’t expect it. But these steps can help you get control of your money so that you come out on top of this life experience