At our blog, we distinguish ourselves by focusing on likely or probable events that can be mitigated through advanced preparation. Our goal is to provide practical and useful advice for everyday individuals like ourselves.
Let's talk about one such event: Unemployment.
Companies occasionally lay off employees due to no fault of the employee. It can be because of changing business conditions. This causes a disruption in the former employee's primary source of income and can cause significant stress. Suddenly, expenses and bills that were previously manageable become uncertain. Life can quickly become a struggle.
If you've ever experienced unexpected job loss, you know that after the initial shock wears off, your mind starts racing as you contemplate the next steps. Following much of the advice in our blog will go a long way to preparing you for this particular uncertainty. Here are the top five actions we suggest you can take to better handle a job loss:
- Establish an Emergency Fund - Having extra cash on hand will help you navigate the inevitable challenges. Start with saving $1000 and gradually increase it to cover 3-6 months' worth of expenses. This will greatly alleviate the immediate financial stress associated with unemployment.
- Stock up on Supplies - If you already have a 30-day supply of essential items, you won't need to worry about buying them during the initial weeks of unemployment. This will also give you the freedom to focus on generating income instead of spending time shopping.
- Explore Additional Income Sources - Diversify your income before your primary source disappears. Assess your skills and talents to identify marketable opportunities. Find ways to monetize these skills so that you can scale them up if you lose your job.
- Reduce Financial Commitments - Evaluate whether you truly "need" certain expenses, such as subscriptions or services. Can you live without for a while? If so, consider cutting them off and redirecting the savings to your emergency fund.
- Liquidate Unused Assets - Do you have items that aren't getting used? Consider selling them. Often, we can replace these possessions with rentals if needed. Assess the expenses associated with maintenance, upkeep, and storage for underutilized items. Selling them can bolster your emergency fund.