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How to Adjust Your Financial Plan After Losing a Job

Personal Finance
man fills out a job application at home and plans how to adjust his financial plan after losing a job

Losing a job may bring forward many difficult questions: What will you do now? How will you cope? What are your options? How will you stay afloat financially? Even if you don't have a financial cushion in place, you don't have to despair!

There are things you could do to keep your finances on track and get through this trying time. Learn how to adjust your financial plan after losing your job.

File for Unemployment

If you're eligible for unemployment benefits, think about filing for these benefits as soon as you receive notice you've lost your job. Depending on your state, it may take time to receive your first unemployment check after you apply and submit all the required documents. Also, note that you'll need to be actively seeking employment while you receive unemployment benefits.

Create a Bare-Bones Budget

Think about creating a budget based on your bare minimum living expenses. While fixed expenses, such as your rent and utility bills, are harder to lower, you might see what you could slash out of your nonfixed (or discretionary) expenses. Think of ways to save on food, transportation and entertainment. Talking to your family and friends might help ensure everyone understands why it's important to cut back on spending.

If you will receive severance pay, think carefully about the wisest way to use it. It might go toward basic living expenses — or perhaps part of it could be socked away to serve as a financial cushion.

Continue Debt Repayments

Being late on car, mortgage or credit card payments will negatively impact your finances. If you find yourself struggling with debt, think about contacting your lenders to ask if they could lower your monthly minimum for a period. If possible, it might also be wise to avoid using your credit card. While you may be tempted to use it during hard times, you may end up paying more in interest if you're not careful.

Protect Your Golden Years

Are your long-term goals still top of mind? Don't let them fall by the wayside. Examine your choices for the money sitting in your former employer's retirement fund. These options usually include keeping the money in the existing account or rolling it over to another retirement fund.

Think about setting up an individual retirement account (IRA), such as a Roth or traditional IRA. Even if you currently can't afford to put a large amount of money into your retirement savings, you might still ensure your money is rolled over now to avoid neglecting it later.

Here's to Your Health

Did your former employer offer health insurance? Ask your former employer when your existing health care coverage ends, and what your options are for staying on its health plan. Depending on your situation, you might also consider purchasing your own health insurance plan. You might also qualify for a special health coverage enrollment period after losing a job, according to HealthCare.gov.

Insurance for Tomorrow

Did your former employer also offer other benefits, such as disability or life insurance? These insurance types could help protect you and your family in case of the unexpected, but it's likely you lost your coverage when you lost your job. Luckily, you could purchase your own insurance policies — and this may be a good time to re-evaluate your coverage needs. Consider speaking with a financial representative who could help you decide on the best choice for your situation.

Study Your Student Loans

Do you have federal student loan debt? If so, you may be able to temporarily postpone or lower your monthly payments until you get back on your feet. There are two options for doing this, according to the U.S. Department of Education: deferment and forbearance. Depending on your financial situation, these options may help you avoid defaulting on your loans.

The major difference between them? When you defer your federal student loan debt, you typically aren't responsible for paying the interest during the deferment period on certain loan types. (Forbearance allows you to temporarily suspend or reduce student loan payments if you meet eligibility requirements, but you will be required to pay the accrued interest.) Learn more about your options by contacting your student loan servicer.

Take on a Side Gig

To help bolster your income after losing a job, consider taking on a side gig. Even if you're busy plotting your full-time career strategy, part-time work could net you helpful additional income. Drum up a list of ideas for generating money while you're in between jobs. You may be surprised by how many opportunities are available, such as being a ride-share driver or a dog walker.

You might also use your existing skills to find your side gig. Are you a trained accountant? Work as a math tutor. Are you a member of an orchestra? Give music lessons.

While you may be working through a fragile period in your life, losing your job doesn't have to mean losing your immediate financial viability. Consider taking these steps to help keep on top of your finances while you're unemployed and planning your next career move.

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Information provided is general and educational in nature. It is not intended to be, and should not be construed as, legal or tax advice. Western & Southern Financial Group and its member companies (“the Company”) does not provide legal or tax advice. Laws of a specific state or laws relevant to a particular situation may affect the applicability, accuracy, or completeness of this information. Federal and state laws and regulations are complex and are subject to change. The Company makes no warranties with regard to the information or results obtained by its use. The Company disclaims any liability arising out of your use of, or reliance on, the information. Consult an attorney or tax advisor regarding your specific legal or tax situation.