Money Smarts Blog
Steps to Take When You’ve Lost Your Job
Mar 26, 2020 | De’Laina Miller, Financial Coach
As COVID-19 spreads in the U.S., people all over the country are beginning to feel its financial ripple effect. We’re literally living in a time that will be documented in our children’s and grandchildren’s history books. Businesses and schools are closing, restaurants switching to take-out only, and families being advised to stay at home. All to protect the health and safety of our communities.
For most of us, and especially for the record breaking 3.3 MM that have already claimed a job loss, the idea of missing work because of an illness or a shutdown is financially daunting. What do you do if you are suddenly unable to work or have lost your job? Check out our five tips on handling the lost wages.
1. Review at your budget (or create one)
You need to know as much as you can about your budget and expenses. If you haven’t already, set up a budget today. And if you have a partner sharing financial responsibilities, do this budget review together.
- Identify and total up sources of income and assets such as an emergency savings that may be able to get you through until you can resume working or find a new job.
- Review your living expenses and eliminate the things you can live without. (Hint: Netflix isn’t essential)
- Reduce expenses in the “essentials” category as much as you can. Opt for home cooked meals over take out.
- Review your debts. You might be able to save money with lower interest rates or reduce monthly payments on outstanding debts.
If you’re currently working but concerned about the financial impact of COVID-19, get ahead as much as you can by building up your emergency savings.
2. Scope out #WFH
If your company hasn’t already done so, talk to your boss about working from home. If you’re going to be quarantined (and are feeling well), you might as well get some work done.
If you have vacation days, PTO, or paid sick leave, use those perks to keep your income coming in while you’re sick or quarantined.
If you do not have any time left or your company does not offer those benefits:
- Find out if your situation is covered by short-term disability insurance
- Ask about emergency leave policies
- Ask about Employee Assistance Programs (EAPs) or other benefits to find out if your employer can connect you with mental and physical health resources, financial wellness and other support services
Considering the Coronavirus pandemic, The CDC and other government organizations are recommending business to provide flexible sick leave policies.
3. Start the Job Hunt
If you are healthy and able to work but have lost your job because of this pandemic, there’s good news: major corporations like CVS, Amazon and Walmart are hiring amid this unprecedented time.
While looking for a new job is not always fun, it could keep you from missing a paycheck.
4. If You Have Debt, Chat With Your Lender
If you are worried about paying your bills on time, talk to your lender to find out if they have any options to help you. Financial institutions, like us, are offering skip-a-payment options and low rate personal loans to help people through this tough time. If possible, call before your payment is due and take some notes to guide your conversation:
- Be ready to share why you are unable to pay, and how long you expect this to be the case
- Determine what you can reasonably pay during this time of difficulty
5. Dip into Savings (with a Plan)
You may need to spend savings or take on short-term debt. Create a plan for using that money and replacing it once you get back to work.
- Look to your liquid assets first, drawing on savings accounts and non-retirement investments. Since you already reviewed your budget, only withdraw enough to cover your basic expenses. Plan to build your savings back up when you start working again.
- Taking on new debt in a financial crisis is never ideal. Unfortunately, it might be your only option. Look for credit cards or personal loans with low interest rates, low fees and favorable terms. Don’t forget to add the new monthly payment into your budget. The faster you pay off this new debt, the less you will spend on interest and fees.
- If you have retirement savings, you may need to cash it out in times of financial hardship. There may be penalties up to 10% for cashing out a 401K before retirement age, and you may have to pay income taxes on any portion that you cash out. Please consult with a tax advisor.
5. Talk to a Financial Counselor
Sometimes, you just want to talk to someone. Whether you want to talk through a plan you’ve made for reassurance or need help creating one, we can help.
Our partner, GreenPath, has been offering financial counseling for over 50 years. Their team of experts understand that financial hardships happen to good people. They’re eager to address your concerns and help build a plan that works for you.