By Mike Azzara | American Express Credit Intel Freelance Contributor
10 Min Read | July 17, 2020 in Money
Job loss can have a big impact, not only financially but emotionally, too.
Cost cutting, reassessing your debt, and hustling for your next gig(s) are all key elements of a sound personal finance management plan after job loss – with the emphasis for each element varying based on your unique circumstances.
Personal finance experts agree it’s important to keep your healthcare coverage.
The first time I lost my job I was totally unprepared, emotionally and financially. A generous severance package and a booming U.S. economy saved me. The second time I joined the ranks of the unemployed came on the brink of the Great Recession, and with no severance pay. I saved myself: Today, I run my own business and write professionally, including about personal finance.
With job losses and unemployment expected to be at high levels for some time, this article combines my experience with external research to offer tips to manage your personal finances after losing your job. It’s organized into five categories:
Emotional resilience: Job loss often brings emotional challenges to be overcome on the road to success.
Cost cutting: Experts say even if you have solid savings in an emergency fund, it’s wise to reduce expenses to make your money last longer.
Reassessing debt: What made sense for managing your debt before unemployment may no longer be the best approach.
Hustle: Try whatever it takes to bring in income while working toward your next job.
Healthcare: Some experts make this their top personal finance priority and suggest multiple ways to keep covered if your employer-subsidized health insurance was lost along with your job.
Because the job you do is often a big part of how you see yourself, many psychologists compare losing your job to losing someone close to you, saying it can cause you to go through similar stages of grief.1 The Forbes Finance Council notes that those emotions may cause someone who just lost their job to make personal finance management decisions that hurt them in the long run, like taking money out of their retirement fund before exploring other options.2 For me, the emotional impact hit hard the first time I lost my job but I was well prepared in round two.
Here are tips that the experts and I agree can help keep you on an even keel and improve personal finance decision-making after a job loss:
Someone once said if you’re not healthy, nothing else matters. Financial planning experts seem to agree. They say maintaining health coverage after a job loss should be a top priority, and Business Insider made it number one.3 Job loss usually counts as an event that opens up enrollment for a new health plan. Here are some options:·
After my first job loss, the severance package was a safety net that allowed me to avoid cutting expenses. Second time around my goal was to launch a new business, so we cut way back to help make our money last. Here’s a list of what I did and what else experts recommend:
People’s circumstances can be very different when it comes to debt management. Here are tips experts suggest if you’re suddenly unemployed while carrying debt:
Bringing money in may be the most urgent priority for many of the newly unemployed. Hustling made a big difference for me the second time I lost my job. With triplets in a private high school and college looming, I hit the ground running and never slowed:
Losing your job, especially during an economic downturn, can be a big emotional and personal finance challenge. Successfully powering through unexpected unemployment means doing many things simultaneously: managing your emotions, cutting your expenses, managing your debt, hustling for income and your next role, and taking advantage of every resource that’s available to you. Even in a downturn, there are some types of companies hiring like crazy – maybe it’s time to reimagine who you are. I did.
1 “5 Stages Of Grieving And Healing From A Job Loss,” Huffington Post
3 “6 things to do with your money when you lose your job,” Business Insider
4 “4 Financial Moves to Make After Losing Your Job,” SmartAsset
6 “A 9-Step Plan For Dealing With Unexpected Job Loss,” Hanscom Federal Credit Union