Life is full of ups and downs which can make a significant impact on your finances. When you’ve just lost your job, it can be especially difficult to keep your money in order. Even when your former employer provides a severance package, failing to find a new position fast enough will result in substantial losses to your savings account. If you’ve recently lost your job and you’re short on cash, here are some creative ways to save until you’re employed again.
- File for Unemployment
You should never be too proud to file for unemployment; to ignore this opportunity would be financially irresponsible. If you pay taxes every year, than you’ve more than earned the right to dip into Uncle Sam’s pockets for once. It doesn’t matter how much money you have or how much you used to make, if you want to save money while you’re between jobs, you need to file for unemployment.
- Tax Breaks
Whether or not you have to file a tax return is not dependent upon your employment status. When you’re unemployed, personal income typically comes to a stand-still. However, that doesn’t exempt you from having to pay taxes. Even if you collect unemployment checks, you still have to pay taxes on them. Because of this, it can be quite easy to fall behind on your taxes. Fortunately, you may be eligible for tax amnesty—a limited time opportunity for a specific group of taxpayers who can pay a defined amount, in exchange for forgiveness of tax liability. If you have accumulated tax debt as a result of your unemployment, seek help from a tax professional who will assist you in qualifying for tax amnesty.
- Cut Costs
Let’s face it, you’re budget isn’t what it was while you were working. It’s time to take a hard look at your finances and figure out ways to cut costs. What are your essentials? Food, gas, rent, and insurance are the things that most of us can’t live without. Until you get back on your feet, you’re mentality should be that of someone trying to pinch every penny. Before you make a purchase, ask yourself, “is this purchase essential?” If the answer is no, (or a ridiculous internal dialogue justifying why you need flat screen) than you shouldn’t dish out a single dime.
- Consider Freelance
Being unemployed is a lot like speeding down the high way while running out of gas. Unemployment benefits and severance packages will only take you so far—sooner or later, you’ll find yourself running on fumes. That’s why it’s important to find some way to make money while you’re unemployed. Websites like fiverr.com are a great resource for anyone trying stay afloat while out of work. Keep in mind, your primary goal should remain finding a new job, and your freelance work should always come second (unless there is job potential).
- Create a Temporary Budget
If you had a budget when you were still employed, it’s as good as useless. Analyze your current income and create a temporary budget until you get back on your feet.
Pro tip: The longer the time frame you give yourself to survive on what little income you have, the better.
If you end up being unemployed for longer than you had initially expected, you might find yourself in a seriously stressful situation. However, if you find employment before you run out of time on your temporary budget, you could end up having some money left over.
- Local Organizations and Resources.
Whether you qualify for unemployment or not, there are local organizations that offer assistance in getting your basic needs met. Things like food banks and clothing exchanges are great ways to save while you’re down on your luck. Be careful to not let yourself become dependent on these organizations, however.
Rather than spending money on gas and car insurance, consider using public transportation instead. A bus pass most certainly costs less than driving your car. Remember, your situation is only temporary, and taking the subway for a month or two isn’t going to kill you.
Being unemployed can be a scary situation, but with the right amount of preparation and discipline, you can get through it without going insane.
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