There are few situations more likely to cause stress and anxiety than losing your job. If you’re one of the 33 million Americans who have recently found themselves in this situation, things are probably tough right now.
It’s hard to know what to do when you’re unemployed, but there are several clear steps you can take to get back on your feet. Learning how to budget on a low income will set you up for a lifetime of better money management, even once you’re employed again.
What To Do When You Lose Your Job
There are two things you need to do right away. Think of these steps as firefighting: You need to put out the fire before you start rebuilding your life.
01 — File for Unemployment Benefits
Because things vary so much from state to state, the first thing you should do is find out what you’re entitled to at CareerOneStop. Thankfully, the federal government has allowed states to change regulations around employment during the pandemic — self-employed people are now also entitled to unemployment benefits, while regular workers may be entitled to additional weeks of support. Some workers may also be eligible to receive more benefits than usual, and for a longer period of time.
02 — Sort Your Health Insurance
Without a job, you may find yourself without health insurance. Don’t panic, though, as there are several options. The first is signing up for COBRA, a federal initiative that allows people to continue with their employee health insurance policies for up to 18 months after leaving a job (though this means you have to pay the full premium, plus a 2% administration fee).
Another option is to apply for insurance through the Affordable Care Act Marketplace. Although it’s usually only open for applications for a short period each winter, there is an exception for people who’ve experienced a “qualifying life event,” which includes losing your job.
You may also be entitled to Medicaid, which offers free health coverage, though this varies depending on where you live.
Get to Grips With Budget Basics
Once you’ve done your firefighting, it’s time to learn how to budget on a low income. If you’ve used goal building in the past, you might be one step ahead of the game here.
For some people who are used to living on a reasonable salary, this might seem a bit alarming at first, but don’t worry — there are some simple money-saving techniques that can see you through.
Work Out Your Budget
There are many ways to work out a monthly budget. The simplest is using a pen and paper to draw two columns: one for any money coming in and another for money going out.
Reassess Your Wants and Needs
Write a list of all the things you spend money on each month. Make sure you include absolutely everything, from health care and household bills to debt repayments and subscriptions.
Now, separate the two into wants and needs by writing a big W or N next to each item. Be kind to yourself — Netflix might not count as essential, but it’s likely that $9 a month is money well spent right now. But the activewear subscription? That’s a firm W at the moment.
Cancel absolutely everything that you can, but take comfort in the fact that this is temporary. It might not be possible to cancel every subscription you have, but many providers will allow you to pause for three months.
Stick to Your Budget
If there’s an upside to the government’s shelter-at-home advice, it’s that there are fewer opportunities to spend money. That daily Frappuccino habit or the pricey spin class is off the table now, as are Ubers across town and dinners out.
But there are still many ways to overspend, particularly if your budget is low. Splurging on clothes or homeware is not what you need right now, but allowing yourself the occasional treat might make it easier to stick to a budget in general.
If you feel like your willpower is really low, you could always try blocking certain websites where you know you overspend and tucking your credit card away for emergencies only. When you go to the grocery store, make a list and stick to it, rather than getting carried away by special offers or things that you don’t need.
Make a Little Extra Cash
Of course, if you’re claiming unemployment benefits, you won’t be able to work while you claim. But there is nothing to stop you from having a clear-out and selling old things you no longer need.
So there you have it. There are simple enough ways to help keep afloat during testing times. If you feel overwhelmed, just remind yourself that all this will pass. You will get the job you want and deserve.
Rosie Hopegood is a journalist, editor and content writer based in London. Her work has appeared in publications such as The Guardian, The Telegraph, Vice and Al Jazeera.