5 Useful Tips to Save Money After Losing a Job

Save Money After Losing a Job

Lost your job? That’s bad. Job hunting can be really tough. What’s even tougher is to survive on a meager return on savings. I am not here to give you advice on how to land yourself another job. What I am going to discuss in this article is how you can save money as an unemployed person with little to no income.

Switch to survival mode

Post job-loss, saving is surviving. Before you save, achieve a mindset that constantly tells you not to succumb to any temptation and incur new debt while you are unemployed. Follow this rule religiously and do not cave in to any temptation. No matter how flashy the branded wrist watch looks or how cool is the gaming console that you’ve always wanted to buy, resist the urge to purchase for you are not in a shape to spend money on flimsy things.

Next thing you need to do is save every dime with a clear vision of the future. If you are dependent on interest income, try spending half of it and save the remaining half. I know how hard it is to save this way, but anything is possible when you switch to survival mode.

Identify expenses to cut

Frugal living is a must when you are out of job. The expenses you need to cut include dining out, paying for luxury services, going on movies or trips, etc. To give you a better sense, cut all expenses that you deem unnecessary. If you are learning piano lessons from a professional instructor or have taken membership recently at a local yoga studio, stop these classes immediately to cut these expenses. These are not objectively necessary like grocery or electricity.

When you are freshly out of job, review your expenses over the previous months, make a list of expenses that aren’t necessary and simply cut them from your monthly budget.

Explore 401(K) options

A lot of people wonder what to do with their 401(K) savings in the event of a sudden job loss. Some decide to withdraw the money they have in their accounts, for they grapple with unemployment and can’t find a way to manage their households in a time when everything is getting more and more costly.

Some people are simply ignorant; they don’t know that they can move their 401(K) to the next employer. Here are all your options if you had an active 401(K) before the job loss:

  • Withdraw all the money.
  • Move to future employer.
  • Combine 401(K) and IRA.
  • Leave it with the previous employer.

There are upsides and downsides to all these options. Some options can only be applicable if you have a certain amount of money in your account. To choose an option, use common sense. If you are confident that you will get a job shortly, think of moving it to your next employer. I advise you to talk to a consultant and get expert opinion on which of these options would be best for you.

Time to redeem coupons

Almost every retailer nowadays offers loyalty bonus and reward points redeemable upon purchase. If you loyalty coupons at home, post job loss is when you should redeem them. It’s a time when you should be less dependent on actual cash and more on other options.

Those accustomed to opulence might consider these options as scraps. However, accumulating such scraps and paying monthly bills using them can save you from financial worries after a job loss. So shed your ego and start collecting scraps. Other scraps that could come in handy when you are out of a job are credit rewards, redeemable travel allowances, bills refunds, etc. So talk to your bank regarding credit reward points.

Collect food stamps

Not having a job makes you eligible for food stamps. Collecting food stamps can give temporary relief. According to the law, an able-bodied person can get food stamps for three months in a three year period. Your motive should be finding a job within the three months time period.

One strategy you can employ if you are a food stamp is saving stamps as SNAP benefits don’t have a monthly expiration date. If you can manage the first three months after the job loss without food stamps while saving the benefits, you can have a total of six months time to find another job.

Another thing to keep in mind is that food stamp amounts are limited. As per Federal Law, a single person household can get $194 as maximum food stamp benefit and $134 as minimum. The Trump administration’s latest ruling tightens the requirements around food stamps. So check whether you’d be eligible under the new rules.

Summing up

A job loss is unfortunate. However, if you panic over it, you’d only waste time and nothing else. So make a strategy of how you could find another job and meanwhile use the tips shared here to make ends meet.