If you find yourself in a tight spot financially, unemployment benefits can be a valuable resource. In fact, nearly 50 million Americans filed for unemployment benefits this year as after layoffs and job losses resulting from the coronavirus pandemic.
While these benefits are great at helping out in a moment of need, it’s important to remember that they won’t last forever. That means it’s important to put a game plan in place for making your financial situation work for you—even after your benefits end.
If you’re receiving unemployment, or are just looking to stay prepared, here are some smart, actionable steps you can take today to get ahead of your future finances.
- Create your post-unemployment budget
- Apply for an unemployment extension
- Take stock of what you have
- Put some of your payments on pause if necessary
- Look for other forms of assistance
- Create new income with a side hustle
- Make the most of unemployment while you have it
Create your post-unemployment budget
Losing your employment benefits can impact how you approach budgeting in a big way. But planning early means there will be far fewer surprises later. If you’re not familiar with how to set one up, no worries! We have a step-by-step guide you can check out here.
🎯 The game plan: Pull out your budget and look at what you’re spending versus what your income is, including your benefits. Then, take the unemployment part of your income out of the picture. This can give you an idea of what you have to work with financially and what further cuts you may need to make to keep your budget in the black. Note: If you’ve already cut your budget down as low as it can go, you’ll want to move on to the next step.
Apply for an unemployment extension
If you’re approaching the end of your unemployment benefits, don’t panic. It’s possible that you may be able to get those benefits extended a little longer.
The U.S. The Department of Labor authorizes state unemployment agencies to offer extended benefits to workers who exhaust their regular benefits during periods of high unemployment. If you qualify, you could continue receiving your regular benefit amount for up to an additional 20 weeks. In most cases, states will notify workers about extended benefits if they’re eligible.
🎯 The game plan: If you haven’t heard anything about extended unemployment, get in touch with your state unemployment agency to find out if benefits are available and whether you qualify.
Take stock of what you have
While you’re in the process of applying for extended unemployment benefits, it helps to take a look at your bigger financial picture to see what resources you might already have. For example, that might include:
1. A little cash in emergency savings. Consider how long you can make it stretch while you look for work. Part of that goes back to cutting your budget as much as possible.
2. Your 401(k) plan at work or an IRA. If you happen to have some money set aside for retirement, you could use that to pay the bills until you’re working again. Under the CARES Act, you can withdraw up to $100,000 from a 401(k) or IRA through December 30, 2020, without paying the 10% early withdrawal penalty. Just keep in mind that taking money out of those plans now can affect your retirement nest egg later.
3. Anything you own that you can sell. Selling some of your stuff can put cash in your pocket quickly when you need it. This may not translate to a long-term income but it could help you bump up your cash reserves so you have a little cushion once unemployment ends.
🎯 The game plan: Take a close look at the resources above, or others you may have— and see if there are strategic ways to tap into them in the short term.
Put some of your payments on pause if necessary
Paying your bills on time is a priority for protecting your credit score and staying in good standing with your lenders and creditors. But if your unemployment runs out, that can put a pinch on your ability to pay.
The good news is, your billers and creditors may have programs that can take some of the pressure off. If you have credit card debt, for example, your card issuers may offer hardship programs to reduce your card’s APR, waive late fees, and temporarily reduce your monthly payments.
With federal student loans, you can request a deferment or forbearance. Either one can let you take a temporary break from making payments on your loans if you’re eligible. You can contact your loan servicer to find out which one you’re eligible for and how to apply. And remember, payments are automatically suspended for eligible federal student loans through December 31, 2020.
Private student loan lenders aren’t required to offer these options but it’s still worth getting in touch to find out what hardship options might be available. Likewise, it’s worth talking to your landlord or mortgage company if you think you might have a hard time paying your rent or home loan once unemployment ends. If you’ve been a timely tenant, your landlord may be willing to work out a payment plan with you. And mortgage companies may also offer hardship programs to help manage loan payments until your income gets back to your usual levels. As part of the federal CARES Act, for example, homeowners with eligible loans can pause their payments for up to 12 months.
🎯 The game plan: Consider the options above, and how they can help protect your credit score and finances when unemployment runs out. The most important thing to remember is that you have to be proactive about pursuing them. So don’t be shy about reaching out to your lenders or creditors to see what kind of help you might be able to take advantage of.
Look for other forms of assistance
Unemployment is just one government program that exists to help people when they’re having a difficult time financially. If you haven’t explored some of the other options out there yet, here are a few programs worth looking into:
- Supplement Nutrition Assistance Program (SNAP). SNAP offers food assistance benefits to eligible families and individuals.
- Special Supplemental Nutrition Program for Women, Infants and Children (WIC). WIC is another program that offers help with getting nutritious foods and it’s directed at women with infants and small children.
- Low Income Home Energy Assistance Program (LIHEAP). This program is designed to offer help with covering your utility bills when money is tight.
Churches and nonprofits can also lend a hand when you need it, which is good to know if you don’t qualify for government assistance based on your family size or income. The Red Cross, for example, helps with supporting local food banks that supply food to people who need it.
🎯 The game plan: Consider looking into other forms of government programs that may take the pressure off while you work through your finances.
Create new income with a side hustle
Finding a job can be challenging, especially when unemployment rates are high. Starting a side hustle can be an easier way to start generating some income when you’re not working a regular 9 to 5.
The best part is that there are plenty of side hustles you can do from home. For example, you might be able to make money by:
- Freelance writing
- Being a virtual assistant
- Starting a website or blog
- Selling things on eBay or Amazon
- Doing online typing jobs
There are also plenty of side hustles you can do to make money outside of your house. You could become a dog walker, for example, or make extra cash mowing lawns. And there’s always demand for delivery side hustle jobs, like being an Instacart shopper or a DoorDash delivery person.
🎯 The game plan: Consider starting a side hustle! And when comparing options, think about how much you might be able to make versus the skills needed and the amount of time required. Experimenting with a few different side hustle ideas could ultimately help you find the right one for you.
👩💻 Looking for tips on side hustles you can do from home?
Make the most of unemployment while you have it
Here’s one final tip to prepare for the end of unemployment: save what you can while those benefits are coming in. If you’ve set up direct deposit for your benefits, for instance, consider having some of those benefits transferred automatically to a savings account. The more money you can add to savings now, the easier it will be to make the transition away from unemployment benefits down the line. Regardless of your current situation, know that there are other options out there to explore and, if you have the time, it’s worth taking a second look!