None of us wishes to hear “You are fired!” There is nothing much to do if the employer has decided to lay you off. The biggest setback of losing a job is the financial instability it brings. You may often have a number of expenses such as rent, EMI, fees, etc, which depend on your monthly salary. Even if you lose your job, these payments need to be made, thus making it necessary to figure out alternative ways of dealing with these requirements.
Additional Reading: How to Calculate EMI?
Ways of Managing your Finances during the Period of Unemployment
- Live at a Place That Does Not Demand Rent
Those living on rent should consider moving in with their parents, friends or relatives. In the case of parents living in a different town, you can move in with a close relative, friend, or colleague, for some time. It can save you from paying the rent. You can also have your deposit back from the landlord, which will help you meet certain expenditures. Although you will have to compromise on your freedom and luxury for time being, you will be able to save a lot of expenses.
- Renegotiate, if You Have Too Many Loans
EMIs happen to be unavoidable and important monthly expenditures. Things change a lot when you lose a job and you might not be in a state to pay our EMIs on time. In these situations, it is advisable to talk to the lender/s and try to renegotiate the terms of the loan/s. The lender might reduce your monthly instalments and extend the loan duration. Although the loan will continue for a longer duration, you will be saved from paying high monthly instalments for some time.
- Search for Freelance Jobs
There are innumerable websites that present freelancing opportunities suiting your profile. You can opt for any of those or search for part-time opportunities through ex-colleagues, friends, or family. Sometimes, you can even do two part-time jobs and earn quite well. If you still want or need full-time employment, you can continue your job hunt.
- Limit Your Investments
If you have made a few investments, particularly in SIPs, it is advisable to discontinue those for a while. Continuous investments in the stock market are not the wisest thing to do at a time when you draw no monetary income.
- Stay Away from Splurging
Staying away from unnecessary expenses usually comes as a reflex action to the one who faces financial troubles due to unemployment. Resist your cravings, no matter how much you are tempted! When you lose your job, you need to prioritize your expenses and leave out those, which are not urgent or indispensable.
- Know More About Loan Protection Plans
Insurance companies might offer a few plans to make things easier during problematic situations like a sudden job loss. A loan protection plan is one such plan that takes care of your loans for a particular duration while you are yet to find a new job.
Additional Reading: Prepare Early in Life to Tackle These 5 Financial Accidents
- Be Strict on Maintaining a Budget
Though you may already have a monthly budget, when you are with no job to handle expenses, you need to be stricter with the budget. Take some time off especially to re-draw your budget as per the situation at hand and restrict spending wherever possible. Keep a timetable of necessary expenses to make such as electricity bills, medical treatments etc.
- Build a Corpus of Funds
You must build an emergency fund for unpredictable situations such as a job loss. You can use your final settlement money for building such a fund. Other ways to build a corpus fund is selling things you do not use anymore such as that bicycle you have not utilized for a year or that extra sound system you do not use anymore etc.
It is going to be difficult at the beginning to manage expenses when you do not have a job, but a little bit of planning can help you get through this period of unemployment.