Effective Ways to Manage Your Finances When Unemployed

By Shiv Nanda.

Shiv Nanda is a financial analyst who currently lives in Bangalore (refusing to acknowledge the name change) and works with MoneyTap. Shiv is a true finance geek, and his friends love that. They always rely on him for advice on their investment choices, budgeting skills, personal financial matters and when they want to get a loan. He has made it his life’s mission to help and educate people on various financial topics, so email him your questions at shiv@moneytap.com.
 

Unemployment is part of every economy and whilst it is a natural phenomenon, this does not make it easier to handle when you find yourself unable to find a job.

Managing your finances can be difficult and stressful in case of unemployment, however, it is not impossible if you take effective steps until you’re back to work. Read on to find out how to manage money effectively while unemployed.

1. Start Budgeting – figure out your spending patterns by using a budgeting tool. This will help you separate your essential expenses from the non-essential ones. You will have little control over essential expenses like rent, food, electricity bills, and credit card repayments but it is possible to cut back on the non-essential expenses, such as luxury grocery items and entertainment expenses.
2. Avoid Using Your Credit Card – Unfortunately, in a crisis the easiest thing to do is to reach for a credit card to make ends meet. However, with high-interest rates and late fees, this can just create new and bigger problems. Instead, set aside a budget for your essentials each month and if you are desperate it is better to apply for a small personal loan from your bank.
3. Review Your Existing Debts – If you have an education loan or any other debts, you can look to consolidate all your debts at a lower repayment rate, and you’ll only have to worry about making one payment every month! You should always ensure that you pay the minimum amount on your debts so that your credit score is not affected.
4. Talk to your Creditors – if you know that you have an upcoming bill that will bounce, call the company and let them know. They will often be incredibly understanding and help set you up with a payment plan.
5. Look for a Part-Time Job – Until you get a full-time job, consider working part-time to manage your finances. You can look for traditional part-time jobs in stores or through apps and agencies or you could even try to get some freelancing work in an area that you have some expertise!
6. Assess your Tax and Benefits Situation – you may find that you are now eligible for tax deductions and credits or benefits that you were not previously able to access.
7. Ask For Help – this could be from family or friends, an agency or professionals. There is often a lot of support that exists if you look for it and ask for help.

Unemployment can be incredibly stressful financially, however by doing the above you can make the most of your money while you look for a new job and be back on your feet in no time!