If you have just lost your job or anticipate unemployment soon, it can be a scary time.
Covid-19 has caused many companies to cut back on staff and close down. And worse, given all the uncertainty ahead of us, it’s hard to see the job market opening up again very soon.
Worrying as it is, you can survive job loss financially and emotionally. And you can lessen the impact if given the time to prepare. Here’s how.
How to prepare for unemployment as best you can
Employers need to give you statutory notice if they are making you redundant (check your employment contract), so you should have time to start putting income aside.
When preparing for unemployment build an emergency fund if you don’t already have one. Ideally, an emergency fund covers three months of necessary expenses. This fund should be increased by your redundancy package should you be eligible.
To survive financially after job loss, be sure to attack this to-do list:
- Pay off your debts where possible. This will be one less thing to worry about. Pay off any high interest debts first, or any that will have harsh penalties for missed or low repayments.
- Get in touch with your bank and ask for mortgage holidays if necessary. Many banks also offer interest-only payments, which can be a more sensible choice in some circumstances. More on that here. If you are renting, speak with your landlord about your options.
- Apply for unemployment benefits. These can provide you much needed support at an already difficult time. To check your eligibility, go here or here.
Create or revise your monthly budget
Do you know how much money you regularly spend? And what proportion of that is essential spending? It’s helpful to know this anyway, but more important if you worry about being made redundant.
You will want to calculate how long your emergency fund might last you. You also want to see where you can trim luxury items from your current household budget to ensure the longevity of your emergency fund.
Money Dashboard is free and can help with this by giving you a full view of your finances and a breakdown of spending by category.
For example, to financially survive job loss you may want to cancel all extra subscriptions, from cable to Amazon Prime and Netflix. You can also switch to a cheaper energy company and keep lights off to save money on your energy bills.
Look after yourself
You will get through this.
Periods of unemployment are often stressful and unsettling. Many people suffer from job loss depression during this period. You are not alone.
When losing your job it’s important to focus on self-care and your mental wellbeing. Talk to your family and friends. Maintain healthy sleep, diet and exercise habits. Brush your teeth and keep your space tidy, these routines matter. If you need additional support, there are charities and hotlines ready to help.
For security, you may also want to start looking for new sources of income – a new job or a side hustle – and use your unemployment time to build skills that will help you re-enter the job market.