Unemployment is at record levels in many areas, the housing market has collapsed and job security is not what it once was. If you happen to be one of the unfortunate recipients of a pink slip, it’s important to have a financial plan in place since you can be sure there are many people with the same qualifications also looking for a job in your sector.
[In Pictures: 12 Money Mistakes Almost Everyone Makes]
Here are five tips to help you prepare and survive a lay-off.
1. Start Saving Now I know this sounds like a cliché, but most unemployment comes at unexpected moments and starting a nest egg now can really help make any downtime looking for employment more manageable. Consider putting at least 5 to 10 percent of your income in a savings account or other kind of easily accessible account should you need to tap an emergency fund without having to incur penalties.
2. Re-Examine Your Lifestyle The trick to saving is learning how to save money. One of the key reasons people are in trouble today is simply because they live beyond their means. Create a spreadsheet of your income and expenses and for the next two weeks, write down every dollar spent. While we take a $4 latte for granted, a single daily visit to Starbuck can cost some people $200 a month or more. Understand where your money goes with a visual spreadsheet.
3. Try to get Better Rates on Existing Bills A lot of people still have cell phone plans from 2005 or have never taken a moment to inquire about cheap car insurance rates or even try to negotiate a lower rate with a credit card company. While almost all the essential bills usually fall within the same range, how do you know if you are paying at the high or low end of the scale if you have never compared rates or inquired about lower ones?
[Visit the U.S. News My Money blog for the best money advice from around the web.]
4. Secure a No-Cost Line of Credit It takes discipline not to use an open line of credit, but if unemployment happens, your odds of finding any source of short-term cash are practically over. Even just a small line of credit can be extremely beneficial when you are forced to go without a paycheck so try and secure a credit line and then put any debit cards or cash advance checks in your safe, only to be opened when you need it.
5. Subscribe to Financial Blogs Lets face it, most consumers are never going to be financial experts, but we are smart enough to know a good tip when we hear it. Lots of popular blogs like Budgets are Sexy and Financial Samurai and others have seen traffic explode since the economic collapse. Try to soak up as much information as you can about personal finance before the HR department contacts you. Anyone can spend money but it takes a little bit of talent and dedication to save. This is not a lesson you want to learn when your back is up against the wall, so prepare a better financial plan today. If unemployment does come knocking at your door, you will be better prepared both financially and emotionally to deal with the next chapter of your life.
Alan Dunn is a Serial Entrepreneur, Licensed Mortgage Broker and publisher of various consumer education websites, including a site with tips on how to save money and a destination consumers use to compare car insurers.