How Do I Manage My Money Since I've Been Laid Off?

Over the first half of 2022, layoffs have been steadily rising due to the rise in labor costs and slower business growth in the face of the predicted economic recession and skyrocketing inflation rates. Unfortunately, with the increased cost of living and widespread layoffs, figuring out how to save and manage your finances has never been more critical. 

What To Do After You Are Laid Off  

When you've suddenly been let go from your job, the most important thing to realize is that being laid off is not your fault. Between the pandemic-related economic turmoil and companies having to navigate new financial and workforce challenges, there are very few things you can do to prevent yourself from being laid off.  

After receiving your notice of unemployment, it's crucial to stay calm and not panic. Although it can be stressful, panicking will not give you a clear plan on how to deal with your finances. Nevertheless, you should take four crucial steps as you navigate this temporary period of unemployment and limited income. 

1. Assess Your Financial Situation  

Sit down for a couple of hours and closely examine your new financial situation. If you have joint income, take time to review all the details and areas of concern with your partner or spouse. When analyzing your new finances, consider these questions: 

• How much liquid cash do you currently have in your checking and savings account within an emergency fund?
• What payments are coming up that cannot be covered with a credit card?
• What are your current credit card balances? Can you make the minimum payment or more on them?
• Is there a low-interest rate credit card that you can consolidate your others on temporarily? Relying on one lower interest rate card might be wise if you don't have a case to cover everything.

2. Determine How Much Your Spending    

Sit down for a couple of hours and closely examine your new financial situation. If you have joint income, take time to review all the details and areas of concern with your partner or spouse. When analyzing your new finances, consider these questions:  For example, you should look at how much do you spend when you go out to eat? How much are weekly groceries? How much are monthly utilities and insurance costs? After assessing your spending, look for ways to cut back on expenses and costs. Here are some examples that can help cut costs: 

• When eating out, locate inexpensive places that are cheaper than your standard restaurant
• Go to the movies instead of plays, and look for discount admissions tickets
• Switch to a more affordable gym or membership option
• Turn your thermostat down in the winter and up in the summer

3. Avoid Major Purchases  

Avoid major and expensive purchases such as a new car or TV during a layoff. Suppose you already have accumulated credit card debt. In that case, it might be wise to condense your loans into a single monthly payment with lower interest rates. 

4. Create an Updated Budget 

If your new income still covers your expenses, you might only need adjustments to your budget. However, if your expense will not be covered or barely cover the cost, you should start to create a new budget based on your new income. First, you need to separate your needs from your wants. Shelter, food, health insurance, and some form of transportation are necessities compared to expensive steak dinners or $500/ month car payments. Before buying something, consider whether it is a need or want.  

Next, you should focus on cutting expenses and saving money by buying items on sale, utilizing coupons, canceling subscriptions that you're not using, and repairing items instead of buying new things. Finally, if you have outstanding loans, you should discuss with your creditor about possibly granting a payment extension or lower interest rates until you have secured another source of income. 

Applying for Unemployment Insurance 

Unemployment insurance is a safety net created to help workers who have been laid off. Unemployment insurance is dictated by local state governments, but is funded by federal and state taxes that employers pay. Each state has requirements for eligibility for unemployment benefits, so before filing, make sure you know your state's rules. In general, the following restrictions will apply: 

• No-Fault Loss of Employment: most people who are eligible for unemployment benefits become unemployed because they were laid off or
• Must be Physically Able to Work: you must be available for work and actively see suitable work

Filing for Unemployment Insurance 

As previously mentioned, unemployment insurance and benefits are regulated and approved on a state basis. In terms of submitting the proper filing for unemployment benefits, each state is responsible for its own unemployment office. You can also find a complete list of state unemployment offices at the US Department of Labor Workforce Security Site. You should file unemployment benefits as soon as possible since some states have a 1-2 week waiting period. As of 2021, you can apply online, by phone, or in person. You must provide your social security number, employment history for the previous two years, wage history, and union information, if applicable. 

Money Received For Unemployment Insurance  

The amount of money you receive weekly from your unemployment benefit can vary based on your previous earning history and the limits of your state. Below is a state-by-state breakdown of unemployment benefits as of 2020. 

Unemployment Benefits by State 

Source: CashMoneyLife 

Severance Packages    

Some companies will provide laid-off employees with a bundle of pay and benefits known as severance packages that helps cover expenses until a new source of income is found. The amount of pay and listed benefits of each package varies from company to company. It is recommended to talk to your company's HR department to find out its offerings and when you can expect to receive the benefits. 

Managing Your Healthcare and Insurance  

If your employer previously provided coverage for your health insurance, check with your company's HR department as soon as possible to see if there is a designated grace period while you seek out other forms of coverage. While unemployed, you might ask your spouse or partner if their employer will cover you and the rest of your family. If spouse coverage is not an option, you should start by comparing and applying for marketplace plans. With the Affordable Care Act, or Obamacare, marketplace insurance offers quality care without excluding you based on pre-existing conditions. After comparing the different types of plans you can prepare for the open enrollment period, which last from November 1 to December 15. 

While comparing marketplace plans you should also find out if you qualify for federal insurance plans such as  Medicaid, Medicare and CHIP. 

Another option for gaining affordable healthcare coverage is to enroll in a membership-based plan such as Mira. Subscription or membership-based healthcare plans allow you to pay a flat installment fee at a fixed rate (monthly, quarterly, or annually) that can cover a range of services.  

Bottom Line  

As previously mentioned, it's essential to recognize that being laid off is not your fault. In this time of economic uncertainty and financial crisis with the impending recession, employers are faced with making tough decisions. Nevertheless, if you are laid off, there are vital steps you can take to lessen that financial burden during your period of unemployment. In the same regard, having a plan and keeping health insurance coverage during your unemployment is crucial.  

With unemployment comes difficult decisions regarding managing money, reducing your overall expenses, and putting needs over wants. When accessing healthcare, you shouldn't be forced to eliminate or reduce your plan because of the cost. With a Mira membership, you get excellent care at a fraction of traditional health insurance costs. For just $45 per month, you get access to same-day lab testing, discounted prescriptions, and urgent care.