A piece of budgeting advice will always come in handy. No matter what you are going through, this is the first thing that you need to do if you really want to be successful financially. Understanding your budget will allow you to determine how you will use your limited financial resources to try and survive whatever you are facing. It will help keep your mind clear so you can make smart decisions despite feeling anxious about your money.
Take unemployment as an example. According to a survey, 39% of respondents feel stressed about job security. What will you do if you just lost your job? There are so many uncertainties surrounding this single unfortunate event. But if you know the right budgeting advice to follow, then you won’t have to feel too stressed. You have a firm understanding of your current financial position. You’ll have a better idea of what you have to do to ensure you can get past unemployment.
Budgeting advice you can use during unemployment
Instead of panicking, you need to quickly look for the budgeting strategy that you will use to survive unemployment. If you have a clear head, you can immediately take the steps that will preserve your current financial reserves. Not only that, but you’ll also know the best course of action that will allow you to emerge from this situation in a stronger position.
So what are the budgeting tips that you need to focus on during unemployment?
Know your current financial position
The first budgeting advice that you have to listen to is to find out what your current financial position is. Do you have enough savings? Were you able to save enough for an emergency fund? The answers to these questions will allow you to determine how much money you have to spend on your basic needs. How many months can your savings support your family if you don’t have a steady income?
If you have no savings at all, that could be a problem. But it’s not hopeless. You might have to ask for financial aid from your loved ones. But if you have enough savings to last you 3 months, you don’t have to do that just yet.
The bottom line is, your next steps will depend on how much financial resources you have right now. So start with this.
Analyze debt and monthly expenses
The next budgeting advice that you have to work on involves your debts and monthly expenses. To be specific, you want to look at your priority fixed expenses. Make a list of all that you are spending on. Rank them according to priority.
The ones on top should be the expenses that you need to survive like food, rent, groceries, utility bills. Next to that are your debts. Now the debts will be ranked based on its priority as well. Usually, secured loans like mortgages should be on top because you need it for shelter and you might lose your home if you fail to make payments. Go through the other debts that you have and see which ones need to be prioritized.
Making a list of your expenses will help you identify what you can cut off in case your finances run out.
Look for new income streams
The third budgeting advice that you need to focus on is your income. You lost your job. That means you need to replace it. No matter how much money you have in your emergency fund, that will run out. You have to prioritize looking for a job.
There are many strategies to increase your income, even in the midst of a pandemic or recession. You just have to recognize what the market needs right now. Because we live in a consumerist society. People will always want to consume something. But their preferences change depending on their circumstances. Find what is in demand and look for employment opportunities in those fields. There might be a freelancing job that you can do that is connected to whatever skill you may have. Your chances of getting employed will be higher once you find out what is currently in demand.
Keep yourself informed
The last budgeting advice that will help you after losing your job is to educate yourself. You need to keep yourself aware of what is going on. How will it affect the economy and your chances of getting another job? The more you know, the smarter your decisions will be. You’ll also know the different options that you have.
You should also find out if your current situation will make you qualified for certain financial aid. For instance, you may be eligible to receive a stimulus check. Or maybe you can get unemployment benefits. These will help boost your emergency fund so it will not run out while you are still waiting to get a new job.
Why budgeting is crucial after losing your job
Focusing on budgeting advice may seem like a waste of time for someone who just lost a job. You’re probably itching to find a job right at this moment. But you have to pause and gather yourself before you make a move. You need to figure out where you stand so you know how many steps you need to take before you can improve your current situation.
Besides, budgeting will bring a couple of benefits to you.
To stay in control of your finances
The first if it will help you control your finances. After all, if you don’t know what your current financial situation is how can you control it? You need to have full knowledge of your current resources to be able to determine how to use it properly. If you don’t make yourself aware of your budgeting strategy, you might end up thinking that you don’t have money anymore. That will make you feel unnecessarily stressed. Or it can make you feel like you have a lot of money when in truth, you barely have anything left to spend for your family.
To help create a new financial plan
The budgeting advice that you will get will also help you create a new financial plan. As mentioned, you know where you stand because you are aware of your current budget. If you know what you want to happen in the future, you can start making plans to get there. Most of the time, the hardest part is the first step. But once you have identified what that will be, you know what the next steps will be.
To get started on future-proofing your finances
Reports revealed that the combination of the pandemic and the recession caused a lot of people to compromise their financial future (income, investments, etc). This means you have a lot to do in terms of future-proofing your finances. And the best way to do that is to look at your budget and incorporate your plans there. Whether you have to boost your savings or increase your income, your budget plan will help you determine which one will help you get closer to a stronger financial future.