5 Tips for Job Loss Financial Survival
Losing your job is one of the most stressful things to endure. At Ameris Bank, we are here to help you navigate this difficult time, offering practical tips that can support your bank account, your personal growth and your outlook on life.
It’s natural to feel discouraged after losing a job but consider the positive: there’s now time focus on your potential and work toward a new personal development goal.
Seeking to better your abilities while unemployed demonstrates leadership and initiative to recruiters. No matter which industry you prefer, there are free or low-cost courses you can take to hone a skill or learn something new.
Personal financial literacy is also an essential skillset. Now is a great time to ensure you know how to manage your finances, in both good and bad times. Whether it’s brushing up on financial wellness through our video library, exploring our various financial education articles, or learning more about the specific products and services that can help you based on goals or life stages, Ameris Bank is here to help.
Now that your income has changed, it’s important to revisit your household budget. Chances are the budget you followed while working accounted for a mix of wants and needs, but with no income or a reduced income, you will have to make some sacrifices. In fact, it’s best to create an entirely new “unemployment budget” so you can really monitor your expenses and wean out any unnecessary spending during this time.
a. Review Your Current Budget
To create an unemployment budget that will set you up for success, it’s important that you first evaluate the current budget you’re working with. How do you typically set up your budget? If you are used to budgeting monthly, you may want to consider a weekly budget instead, so you check on it more often during this unpredictable time. Look at the amount of money you previously spent in each category (housing, groceries, education, vacations, etc.) to get a better idea of where your money typically goes. Some credit cards allow you to see these different categories within your past statements.
b. Cut Your Expenses
An important element of saving money is to understand which current expenses are “necessary” versus “nice to have.” Rent/mortgage, heat and water, for example, are considered necessary expenses that should be accounted for in your budget. However, services like video and music streaming, gym subscriptions and entertainment are expendable and can be cut during hard times. Start by creating two columns in a spreadsheet: one column should list all necessary expenses and the other all unnecessary expenses. This will allow you to better visualize the areas where you can cut back. It may be an adjustment, but if your income has changed, eliminating as many “nice to have” expenses as possible can be helpful for your wallet.
If you need assistance paying your bills, prioritize them based on when they are due. If you need to pay certain bills in full at the end of each billing cycle, make sure to do so. You may have to carry a credit card balance as a result but try to at least pay the minimum balance due to avoid incurring any late fees. When you’re feeling financially stable again, pay off the rest.
If you have a 401(k) or IRA with your former employer, you may want to consider rolling it over to another qualified account. While your 401(k) or IRA is yours for life, a rollover may offer lower fees and more investment options. Consolidating your funds can also make it easier to manage your retirement savings.
To avoid paying taxes or receiving a penalty, opt for a direct rollover through your current plan administrator. If instead you choose to withdraw the money and move it yourself, keep in mind you have 60 days to deposit it into your new account before getting penalized. Although it may feel tempting to skim off the top, try your best not to touch your retirement savings. All that will do is tack on additional fees and penalties and give you less money to leverage in retirement.
If you feel inspired to start a business of your own while unemployed, you may want to look into converting your retirement account into a Solo 401(k). This is appealing to many entrepreneurs because it allows you to access funds added to this account any time, without paying penalties or taxes.
It’s vital to keep your health insurance while unemployed. There are a few options to maintain health insurance, which can be contingent on your prior employer and your individual needs. You may be eligible for coverage under The Consolidated Omnibus Budget Reconciliation Act (COBRA) if your former company has over 20 full-time employees. While this can help you close the gap, COBRA is only available for a limited period of time (18 or 36 months, depending on what you’re approved for). COBRA can also be quite costly, as the individual usually has to pay the entire premium, with no help from an employer.
You may also qualify for coverage through the Health Insurance Marketplace under the Affordable Care Act. While open enrollment occurs once a year, you may be eligible for a Special Enrollment Period if you’ve recently lost a job.
One of the most challenging parts of being unemployed can be admitting it to others but be sure to let your bank or credit union know about your employment status.
Many financial institutions like Ameris Bank offer personal loans and line of credits to help you afford necessary expenditures at a lower interest rate than other types of debt. Your bank can also set you up with certain programs that help with financial hardship, like flexible credit card payment dates or a financial advisor to review your payment plans or debt refinance options. Contact Ameris Bank today or visit one of our branches to get help today.
Published August 2024
This material has been provided for general informational purposes only and does not constitute either investment or legal advice. Consult a financial advisor or legal professional regarding your individual situation.
The opinions voiced in this material are for general information only, and are not intended to provide specific advice or recommendations for any individual.
1. Invest in Personal Growth and Development
It’s natural to feel discouraged after losing a job but consider the positive: there’s now time focus on your potential and work toward a new personal development goal.Seeking to better your abilities while unemployed demonstrates leadership and initiative to recruiters. No matter which industry you prefer, there are free or low-cost courses you can take to hone a skill or learn something new.
Personal financial literacy is also an essential skillset. Now is a great time to ensure you know how to manage your finances, in both good and bad times. Whether it’s brushing up on financial wellness through our video library, exploring our various financial education articles, or learning more about the specific products and services that can help you based on goals or life stages, Ameris Bank is here to help.
2. Create a Budget Plan
Now that your income has changed, it’s important to revisit your household budget. Chances are the budget you followed while working accounted for a mix of wants and needs, but with no income or a reduced income, you will have to make some sacrifices. In fact, it’s best to create an entirely new “unemployment budget” so you can really monitor your expenses and wean out any unnecessary spending during this time. a. Review Your Current Budget
To create an unemployment budget that will set you up for success, it’s important that you first evaluate the current budget you’re working with. How do you typically set up your budget? If you are used to budgeting monthly, you may want to consider a weekly budget instead, so you check on it more often during this unpredictable time. Look at the amount of money you previously spent in each category (housing, groceries, education, vacations, etc.) to get a better idea of where your money typically goes. Some credit cards allow you to see these different categories within your past statements.
b. Cut Your Expenses
An important element of saving money is to understand which current expenses are “necessary” versus “nice to have.” Rent/mortgage, heat and water, for example, are considered necessary expenses that should be accounted for in your budget. However, services like video and music streaming, gym subscriptions and entertainment are expendable and can be cut during hard times. Start by creating two columns in a spreadsheet: one column should list all necessary expenses and the other all unnecessary expenses. This will allow you to better visualize the areas where you can cut back. It may be an adjustment, but if your income has changed, eliminating as many “nice to have” expenses as possible can be helpful for your wallet.
If you need assistance paying your bills, prioritize them based on when they are due. If you need to pay certain bills in full at the end of each billing cycle, make sure to do so. You may have to carry a credit card balance as a result but try to at least pay the minimum balance due to avoid incurring any late fees. When you’re feeling financially stable again, pay off the rest.
3. Evaluate the Nest Egg in Your Retirement Account
If you have a 401(k) or IRA with your former employer, you may want to consider rolling it over to another qualified account. While your 401(k) or IRA is yours for life, a rollover may offer lower fees and more investment options. Consolidating your funds can also make it easier to manage your retirement savings. To avoid paying taxes or receiving a penalty, opt for a direct rollover through your current plan administrator. If instead you choose to withdraw the money and move it yourself, keep in mind you have 60 days to deposit it into your new account before getting penalized. Although it may feel tempting to skim off the top, try your best not to touch your retirement savings. All that will do is tack on additional fees and penalties and give you less money to leverage in retirement.
If you feel inspired to start a business of your own while unemployed, you may want to look into converting your retirement account into a Solo 401(k). This is appealing to many entrepreneurs because it allows you to access funds added to this account any time, without paying penalties or taxes.
4. Re-visit Health Insurance Plan Options
It’s vital to keep your health insurance while unemployed. There are a few options to maintain health insurance, which can be contingent on your prior employer and your individual needs. You may be eligible for coverage under The Consolidated Omnibus Budget Reconciliation Act (COBRA) if your former company has over 20 full-time employees. While this can help you close the gap, COBRA is only available for a limited period of time (18 or 36 months, depending on what you’re approved for). COBRA can also be quite costly, as the individual usually has to pay the entire premium, with no help from an employer.You may also qualify for coverage through the Health Insurance Marketplace under the Affordable Care Act. While open enrollment occurs once a year, you may be eligible for a Special Enrollment Period if you’ve recently lost a job.
5. Request Help from Your Bank or Credit Union
One of the most challenging parts of being unemployed can be admitting it to others but be sure to let your bank or credit union know about your employment status. Many financial institutions like Ameris Bank offer personal loans and line of credits to help you afford necessary expenditures at a lower interest rate than other types of debt. Your bank can also set you up with certain programs that help with financial hardship, like flexible credit card payment dates or a financial advisor to review your payment plans or debt refinance options. Contact Ameris Bank today or visit one of our branches to get help today.
Published August 2024
This material has been provided for general informational purposes only and does not constitute either investment or legal advice. Consult a financial advisor or legal professional regarding your individual situation.
The opinions voiced in this material are for general information only, and are not intended to provide specific advice or recommendations for any individual.