By Kelley Muhsemann
Communications and Marketing Manager
During the best of times, being “let go” or “laid off” can wreak havoc on your finances. But during a period when so much in life is uncertain, a job loss can feel catastrophic. In addition to financial concerns, you might feel a lack of purpose, or develop unhealthy habits in order to cope with the stress. Highlighted below are some simple tools that might reduce your stress, and help you create a plan of action in the event of an unexpected job loss.
Build a budget.
Pandemic or not, creating a budget is one of the greatest personal finance tools at your disposal. As American author John Maxwell famously stated, “a budget is telling your money where to go, instead of wondering where it went.” Creating a budget can help you see where you can cut corners, where you might be spending needlessly, and what you can do temporarily to help ease the burden of a missing paycheck. Download our free budget worksheet to get started.
Contact your credit card company, mortgage lender, or utility company and let them know about your situation. Oftentimes companies can reduce your monthly payment or can offer an extended due date. It’s also helpful to be proactive with your free time. Try creating a daily schedule and sticking to it, find a free online course and learn something new, or research job application best practices and update your resume and cover letter. Using your time wisely can help you take charge of your career goals and could help you land a new position.
Try something new.
According to Forbes, more than one third (36 percent) of U.S. workers are in the gig economy. If you have a specific professional skill like marketing, Web design or accounting, peruse sites like UpWork and Fiverr to find freelance jobs. Other sites like Moonlighting and ThumbTack hire dog walkers, event planners, math tutors, home improvement experts, and everything in between. The pandemic has also created a need for some unconventional jobs. Many people have begun showing off their mask-sewing skills or provide personal shopping services for those who are unable to leave their homes.
Keep your emotions in check.
During financial emergencies or stressful situations, it can be hard to contain your emotions, and reaching for your 401(k) or other retirement savings can seem like an easy answer. Another financial “crutch” people tend to use are credit cards. But both of these emotionally charged, temporary “solutions” can do real damage to your financial future. Try to stay in the present and think about your needs in terms of “now.” How much money do you need to survive the next 6 months? If you can survive without taping into your retirement savings, or racking up credit card debt, you will likely save yourself tax penalties and large amounts of interest in the long run.
Do your homework.
There may be some financial relief if you have been impacted by the Coronavirus physically or monetarily. Research the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which allows qualified individuals to take up to $100,000 out of an IRA penalty-free. Any federal income tax due can be spread out over a three-year period, and the distributions can be repaid within three years to a retirement account tax-free. Be sure to speak with a trusted financial advisor about this offering before making any decisions, as it could still impact your future savings.
Secure your future.
Make a list of everything you commit to do when you get back on your feet. For example, create an emergency fund so you will have three to six months of savings to pay expenses in a liquid saving or Money Market Fund, for the next time you are faced with an emergency or a major unexpected expense.
R.W. Rogé & Company, Inc. helps clients plan, achieve, and live the life they want. To learn more about how we do this, click here. To discuss your financial future with a knowledgeable Senior Wealth Advisor, contact us at 631.218.0077 or at email@example.com for a complimentary consultation.