6 Financial Steps to Take After an Unexpected Job Loss

Losing your job unexpectedly is among the most difficult events a person can experience. Clearly, the income you rely on has abruptly stopped, and that triggers fear and uncertainty. But job loss also takes a toll on us mentally. It’s hard not to take it personally and wonder what you could’ve done differently.

But if you’re one of the thousands of Ghanaians who recently lost a job, keep your head up — this is hopefully a temporary setback. But in the meantime, while you’re on the job hunt for a new job, you’ll want to pay a close attention on your finances. Here are a few important financial steps and actions to take immediately after a sudden job loss.

1. TRIM DISCRETIONARY SPENDING

Run through your monthly budget, item by item, and cut discretionary spending (services and products that aren’t essential). If it’s nice to have but not critical and crucial to your living, or you can do it yourself, cut it.

You can also get creative about reducing the costs of some essential services. A cell phone, for instance, is a must for your job search, but do you need all those minutes or data? You can also shop at a discount grocer and make simple meals at home. Discretionary spending is the easiest to control, and there are usually places to cut back.

In a similar way, you may want to reverse auto-pay &/or auto-transfer on your accounts. This will give you more control over when money leaves your account so you can better manage cash flow and avoid any overdrafts.

2. REVIEW YOUR INSURANCE COVERAGE

If you have permanent life insurance, now is a good time to review your policy. You may have accumulated cash value or gained some cash back benefits (dependent on your insurance provider and policy) that you could access to cover expenses or pay your premiums to keep your policy in force.

3. DIP INTO YOUR EMERGENCY SAVINGS

If you have an emergency fund saved up to cover expenses during rainy day, this is precisely the time to use it. Fall on your emergency funds to pay your essential bills to keep the lights on and a roof over your head and probably, put food on your table for a while.

A job loss is exactly what an emergency fund is for. Use this available cash instead of reaching for loans –either from friends, family members or financial institutions– which will have a toll on your finances once the emergency is over.

4. PRIORITIZE YOUR BILLS

Rent, utilities, loans and debts will still come due. However, you have some little room here. In good times, it’s always better to pay the full balance of your loans and other bills. However, if you've started utilizing your emergency fund and it's beginning to run short, you could consider making just the minimum required payment on loans and other debts temporarily. This means your loan balance will accrue interest, but your goal currently is to stretch your cash as far as possible so you can cover other essential, fixed expenses.

5. CALL YOUR CREDITORS

Despite your best efforts, you may still be falling behind on your bills. While that could be incredibly stressful, there’s room to negotiate. Contact your landlord and other people you are financially indebted to and tell them your situation. You may be able to negotiate or renegotiate a payment plan. Be frank, be patient, be persistent.

6. REACH OUT TO YOUR ADVISOR

If you have a financial advisor, this is the best time to give them a call. They’re money management experts, who can provide advise that’s specific to your situation. They know your options and may have a recommendation or solution that hadn’t crossed your mind. What’s more, you can leave the stressful money matters to them while you focus on your family and getting back on your feet.

Written by Carl Engelking of Northwestern Mutual, adopted and modified by Higher Heights Financial Services