December 29, 2013

How To Budget For Unemployment

Right now, millions of Americans are unemployed. Being unemployed is no fun. It’s incredibly challenging to not have a source of income, but if you budget for unemployment, it can make this stressful time of your life a little bit easier.

Have you lost your job? Have you asked yourself recently if you can afford to be unemployed? It’s certainly a drain on the finances. When you’re unemployed, the job search becomes a full time job, but it doesn’t pay.

If you’re in the middle of the job hunt, be sure create an unemployment budget. Hopefully you’ve been saving a good percentage of your paycheck so that you have something to fall back on. Having an emergency fund really is important.

The best way to budget for unemployment is to decide what you need vs. what you want. There is a big difference. It may mean that you have to make some “drastic” changes to your lifestyle. Here are some ideas to cut down on your spending:

  • Eating/Drinking Out – Going out for a burger and a beer can add up quickly.
  • Phone Plans – It’s not hard to change your phone plans to a cheaper option. Do you really need unlimited texts?
  • Grocery Shopping – Try to avoid brand names and look for the specials.
  • Books/Movies – Try the library. They have an awesome free selection
  • Cable – Do you really need to watch your favorite reality tv show?
  • Coffee – Buying a cup of coffee a day, can easily cost you over $1000 per year.
  • Vacation – Don’t cancel it, but plan to delay it until you can afford to enjoy it.
  • Insurance – Higher deductibles mean lower monthly bills.
  • Drive Less – Gasoline is always pricey. Try public transportation. It’s way cheaper.
  • Monitor Your Home’s Temperature – A few degrees difference in your home can save you bunches of cash each month.
  • Go To Free Activities – There are plenty of free plays, concerts, parks, workouts that you can do without spending a dime.

There are lots of other options to help you survive the unemployment hurtle. You can dive into savings and retirement funds, go on unemployment, do home improvement and lawn projects on your own, discontinue magazine subscriptions, the options are endless. The key is to not go into debt.

You should always have a good idea of how much money you need to survive. That includes paying your insurance, taxes, mortgages, food , and the other necessities of life. Budget for that amount. How much money do you need to live each month? Try not to spend more than that amount. Don’t spend needlessly. You can even consider selling things on ebay to make a few extra bucks.

It’s important to keep your finances under control, even when you don’t have a normal source of income. Budgeting for unemployment is not something to look forward to, but it is absolutely mandatory. Often it’s wise to take any job you can get, even if you are overqualified. Staying employed, even part-time, can help you stay afloat, build a network, and collect a paycheck.

Start by understanding your finances. Always save money whenever possible. Cut back on your spending. Surviving unemployment is stressful, complicated, and nerve-wracking. No one wants to be unemployed, but it happens. It’s best to be prepared.

If you’re a job seeker, be sure to take advantage of our industry guides and job search board. Also our newsletter archive and blog are great places to get job search advice.


About this Author 

Derek Lennon is a skier and writer who lives, works, and plays in the mountains. He travels the globe in search of snow and adventure. Life has allowed him to live and work all over the world doing cool jobs and loving every minute of it.

Sign up for our newsletter!