What to do if you recently lost your job and have become unemployed - Covid19 impacts - Savology - free financial planning in 5 minutes

COVID-19 has left millions across the country jobless and in a vulnerable situation.

It’s no secret that many Americans have been directly impacted by this pandemic and millions continue to feel the economic and financial struggles. It’s hard not to feel the pressures.

As you navigate through this immensely challenging time, I hope to give you some ideas of what you can do if you have recently lost your job (or know someone that has) and are feeling both stressed and worried about how you are going to financially survive during this crisis

Take An Honest Assessment Of Your Situation

It can be easy to freeze up when hardships happen, or to even run from your problems by not facing them head-on.

We often refer to this as fight or flight mode, and it takes precedent through every challenging or unsettling situation we are faced with.

When you suddenly lose your job, and your primary income source, in a time of crisis like COVID-19, it’s more than natural that your emotions might take over causing you to grieve and freeze up.

However, to give yourself the best chance of surviving and making it through, you need to take your emotions out of it and face both the reality and seriousness of the issues by analyzing everything with as much clarity as you can.

Here are some questions you can ask yourself:

  • What are the factors around you that have directly led to a loss of employment? 
  • Look at the current job market. How hard would it be to get a job in your industry with your skill set, where you live? 
  • Are you in a position to pick up short-term, side work online? Data entry roles, writing reviews and doing surveys, you name it.
  • Look at your expenses. How much money do you have saved? Do you have an adequate emergency fund and how long will your savings last?  

Thinking about everything all at once often doesn’t help and can feel even more overwhelming.

The key is to start small and to not focus on everything all at once – it’s exhausting. Rather focus on finding the small, but impactful, things you can work on immediately to start improving your situation.

Prioritize and cut your spending… now

When the income stops coming in, one of the first things you need to do is cut your expenses and shift your spending.

I would personally urge you to move as quickly as you can when it comes to cutting your expenses.

Take a look at your bank statements and credit card usage and look to see which of those expenses you can nix immediately.

The faster you move, the more runway and comfort you will give yourself to recover from your situation. There is no such thing as reacting too fast when it comes down to something as serious as this. 

When working on cutting down your expenses, it is important to prioritize your life situation and what is important to you. Your focus is now protecting and maintaining any bit of financial security that you have.

Importantly, you should consider your family’s health as a high priority as you cut your expenses. Money problems can and will be fixed, but some family and health situations can affect you forever, leading to more permanent expenses overtime.

Here are a few important things that you should heavily consider when prioritizing:

  1. Feeding you and your family. In order to have a healthy immune system and be able to work towards bettering your situation you need to make sure you are in a good mental state. Part of this is being well fed. Food will give you the energy you need to face this crisis and get back on your feet. 
  2. Housing. Having a place of shelter to keep safe is important to your physical and mental well-being. 
  3. Utilities and electricity. In order to be motivated and confident you need to take care of your health and hygiene. This will also give you internet access which is crucial to having in our modern economy with this pandemic. 

It’s true that having access to more money means you have more options and resources to help you get through these challenging times. Firstly, it means you have a longer runway to work within your search for employment. Secondly, it will also allow you to have flexibility in relocating, getting the proper education, or acquiring any specific things you need for your new employment.

Here are a few areas that I would personally recommend taking a look at to see where you can cut your spending and preserve your financial security:

The first thing that immediately comes to mind is stopping all automatic payments for unnecessary purchases. Take a quick look at all your monthly and annual subscriptions and decide which ones, maybe all of them, need to go.

On that note, I would even consider looking at your current phone plan to see if you can get one that helps you save any amount.

Next, do a quick audit of how you are currently spending your money on food.

If you’ve been eating out and ordering takeout food, then stop that right away because it can be expensive. Instead, look at buying and eating cheaper food items to make your savings last longer. You can also look to get support from any food pantries or government support that are available. Consider asking for help from your local community members or organizations.

The third thing that comes to mind when it comes to cutting down your spending is looking for ways to downgrade, or cut down on, your living situation and your transportation expenses.

These types of expenses are often the biggest expenses in any household’s budget. This can result in huge savings allowing you to conserve your savings for even longer. I would suggest calling your landlord and renegotiating your rent or car payment. Don’t be afraid to ask for a discount. If you are a good tenant, It is very much in your landlord’s best interest to keep you in your housing at this time.

Now, you might be wondering what are some ways where you can replace your current income so that you still have money coming in or at least ways that you can work towards replacing your income. Below are four ways to help you get back on your feet.

#1: Apply for Unemployment Income 

Unemployment benefits from the government can be a huge financial help during this time of crisis when many companies have put a pause on hiring and finding work is seemingly difficult. If you are in a situation where you have been recently unemployed due to the economic pressure of the pandemic, please do yourself a favor and apply for this and take advantage of it.

In fact, the Coronavirus Aid, Relief, and Economic Security (CARES) Act has expanded the unemployment benefits further by introducing the following:

  • Self-employed workers and gig workers to receive unemployment benefits 
  • All unemployed workers to receive an extra $600 a week for up to six months 
  • Unemployed workers to get an extra 13 weeks of benefits beyond the number a state currently provides

Unfortunately, no one can predict how long this pandemic will remain for and how the state of the economy and workforce will be over the next few months. For these reasons of uncertainty, it’s critical to make sure that you are cutting your expenses and taking advantage of available government programs that are put in place to protect your financial security.

#2: Reach out to your network for support and work

During these immensely challenging times, strength comes in numbers. Don’t be afraid to reach out to your network (friends, family, past colleagues, LinkedIn connections, etc) and let them know about your situation. Ask your network if they know of any financial or employment resources or even if they know people who might be capable of helping you find employment and bridge the gap.

I would suggest reaching out to people personally. A general Linkedin message can be good, especially if your network decides to tag relevant people and their own network. But there’s nothing like a personal message when it comes to going the distance.

The important thing here is not to be afraid of asking for help. Your network and support system exists for a reason, especially in these circumstances.

#3 Avoid taking on additional debts 

Oftentimes people go into debt to maintain their lifestyle. While sometimes this is out of necessity, that’s not always the case and I would caution against doing so.

Most people tend to think that their financial problems won’t last long and they will be back on their feet in no time. While it is good to be optimistic, it is prudent to take massive action in preparation for the worst case scenario.

Instead of going into debt, take action where you can and cut your expenses down significantly. By doing so, you’ll realize that you will be best prepared for whatever comes your way instead of being caught flat footed and not have the money when things go wrong. This takes humility because it can be hard and embarrassing to admit to others that you are in trouble. 

It is important to consider your credit and to protect it. You will have more opportunities in the future if you have access to credit. This is why it is important to make sure you are making your regular payments. It’s also critical to make sure you are making more than just the minimum payments and not maxing out your credit cards. 

#4 Consider starting your own business

Alright, while this might seem like an unlikely fit for this list, there’s good merit to including it. Now might just be the right time for you to start that business you have been thinking about for years.

But wait! Before you jump in head first, it’s important to understand that it can often take time and capital to start a business. This is why having a sufficient amount of savings set aside is even more important if this becomes a real consideration of yours.

If you have enough money to live off and start a business, the timing might just be on your side. And truthfully, many new businesses come during times of crisis. This is simply because people need help in more ways than one and your business might be the innovative solution that they are looking for.

If you’re not sure where to start, there are a lot of great resources that can help you get set up and sell your products or services in just a few hours. Consider taking a look at sites such as Shopify, Gumroad, Etsy, to name a few.

Moving forward and beyond during recessions

If you’ve been feeling the pressures of unemployment and the lack of income coming in, it’s important to make sure you’re doing everything in your power to protect your income. But in addition, it’s also important to keep moving forward and learn from these situations.

It’s important to have a healthy emergency fund for rainy days because financial emergencies can, and do happen. It is so important to be prepared when one does. Learn your lesson and avoid putting yourself in a situation where you are unprepared in the future.


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