By Tracy Scott
If you’ve recently experienced a temporary layoff, i.e., furlough, or been permanently let go from your employer, anxiety, fear, and out-right panic might rule the day. But, before these understandable emotions lead you to make unwise financial moves, take a moment to breathe and grab a notepad and pen. You’ll need them to record the specific actions you need to take to bring calm during these uncertain financial times and adjust your budget after a job loss or furlough.
Determine Income Sources ASAP
Don’t delay speaking with your employer regarding severance pay and healthcare benefits once you receive notice about the furlough or job termination. Since each situation is different, communicate directly with your human resources contact to obtain accurate information. Find out:
- When you’ll receive your final paycheck?
- What will the final paycheck include? e.g., back pay, accrued vacation or sick leave, etc.
- How will you receive the paycheck? e.g., via U.S. mail, direct deposit, etc.
- Will your healthcare benefits continue? If not, what is the final date of coverage?
Research Government Assistance Programs
Whether the change in income is due to a national disaster, state emergency, or an internal decision made by your employer, don’t assume that you’re on your own. Uncover additional sources of income by visiting your state’s unemployment office, followed by the U.S. Department of Labor. Each may provide information on how to apply for unemployment benefits or financial assistance based on your situation. They can also offer state and federal guidance if you’re unable to obtain needed answers from your employer.
Tap Your Emergency Fund Savings Account
If you’ve built an emergency nest egg, now is the time to crack it. After you’ve widdled your bills down to the necessities, and confirmed your available income sources, use your savings account funds to make up the difference. These funds should be applied to your other income sources only after you’ve established a bare-bones budget.
Downgrade Your Monthly Expenses
Start by identifying which expenses you can reduce or eliminate. While it may seem obvious that you’ll no longer spend money on certain expenses, like a daily caffeine fix, gym membership, or subscription service, there are certain items you won’t be able to remove from your budget. For example, unless you have a landline, your cell phone is here to stay. However, that doesn’t mean you can’t drastically reduce this monthly bill. Consider lowering costs by relying on Wi-Fi instead of an unlimited data plan or switching to a no-contract/pre-paid plan.
Communicate with Creditors
Fixed expenses only appear harder to reduce. Before you assume your mortgage or rent payment is non-negotiable, contact your lender or landlord. If your furlough or job loss is due to a national emergency or natural disaster, they may offer temporary financial relief. The only way you’ll know for sure is by contacting them and explaining your situation. Include other debt holders, such as student and auto loan lenders, on your contact list. Be prepared to let them know what you can afford to pay based on your new reality, and ask if they have solutions to help you meet those goals.
The stress of losing your income, even temporarily, can leave you feeling helpless. Taking charge of your budget is the best way to regain control. As you wait to hear the words “Welcome back to work!” or “You’re hired!”, know that when you have a financial plan, you’re more likely to make every dollar count.
If you need help adjusting your budget after a job loss, Generations Federal Credit Union (GFCU) is ready to assist you during the COVID-19 public health emergency. All GFCU consumer loans are eligible for Loan Payment Relief through June 2020 to help those whose income has been impacted by COVID-19.