Layoffs. Furloughs. Reduced hours. Dwindling sales. Worries about losing your job and income are real. As unemployment climbs and businesses close, there are things you can do to prepare for what may happen.
Start today with a 7-step plan.
Start or add to an emergency savings account. Setting aside money in any amount will help – and you’ll be surprised at how quickly you build a nice cushion. This account is the perfect place to deposit government stimulus checks, birthday money, cash from a side job, even the $10 you saved on gas, anything extra you can use later when you need it most.
Prepare a list of all your creditors: car loans, credit cards, mortgage company, personal loans, school loans, even your landlord. Have their phone numbers and email addresses handy. If you lose income, be ready to ask immediately about deferments or alternate payment options.
Know where to access government relief and which documents are necessary to apply for unemployment and other assistance programs. Every day counts when you need money, so have those forms downloaded or printed and ready to use. The sooner you act, the sooner you may receive assistance.
Start cutting your expenses as much as possible. Now’s the time to create a pared-down budget, eliminating extras like restaurant meals, unnecessary clothing and travel, and impulse purchases. Pinpoint where your money typically goes. Then make the tough call on where to cut. Refinancing loans may be an option. Also consider transferring your credit card balances to lower-interest cards.
Research a few future funding options (just in case). A debt consolidation loan may help lower interest rates across multiple loans. A home equity loan would provide one lump sum, using your home as collateral. You can also ask for financial help from a friend or relative, or, as a last resort, consider using any existing credit you may have available.
Tap company resources. Ask your HR department about support they might have in place. Get the facts about severance, continued health care benefits and even borrowing from your retirement fund. Some employers, especially restaurants, offer furloughed or laid off workers free groceries. While you have a job, use existing health care coverage to take care of medical or dental concerns that you and your family might have been putting off.
Map out new job opportunities. Look around now for ways to make money – and start talking to employers. Polish your resume, submit applications and go on interviews. Driving services, delivering food, babysitting, tutoring, home repair and house cleaning will help you earn quick cash to pay bills or stash away.
Start these simple steps now, and you’ll be a step ahead, whether you lose your job, see your income reduced, or experience a future financial emergency. Taking action will bolster you financially for whatever might be around the corner – unexpected medical bills, home repairs or the need for a new car. You’ll be a little more ready and a lot more confident.