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Five tips to prepare financially for an unexpected loss of income

With cutbacks, mergers and downsizing, job security has become a thing of the past. Nothing is guaranteed when it comes to longevity within the workplace. Do you have a plan if faced with an unforeseen job loss? Consider these five tips for preparing and coping with unemployment.

Create a financial plan

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Look at your monthly expenses to determine how long you can cover them if unemployed. Planning — and sticking to — a budget and trimming nonessential expenses are key. Also, reach out to your credit card, auto, mortgage and insurance companies to inquire about lowering your annual percentage rates or reducing your monthly payments until you obtain steady employment.

Apply for unemployment benefits

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To bridge the income gap, you may choose to apply for unemployment benefits. The length of time you can collect unemployment benefits in Pennsylvania is typically 26 weeks. Keep in mind that taking a severance package, temporary work or withdrawing from retirement accounts may prevent you from receiving unemployment benefits. For state-specific information on unemployment benefits and employment assistance, visit the Pennsylvania Department of Labor & Industry.

Plan for insurance coverage

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Health care premiums can be a large expense for most families. Maintaining health care coverage after an unexpected job loss can be difficult to manage. Under the law, you may have the option of staying on your employer’s plan for up to 18 months. However, you should compare rates from multiple insurance companies to find the best combination of rate and coverage affordable for your budget.

Note, employees who opt to continue insurance coverage under their employers’ group coverage are responsible for paying 100 percent of the premiums. This means that in addition to paying your share of the premium, you will now have to pay your employer’s share as well. Because the Affordable Care Act is changing the options people have for obtaining insurance, it may be best to research other options than simply remaining with your former employer’s plan.

Creative cash-flow solutions

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Turn unused, unwanted items in your home into a profit by coordinating a garage sale or by selling gently used items through a local consignment shop. You can also try marketing your items in an online auction, such as eBay, selling to the highest bidder. Any items you are unable to sell can be donated to charities such as your local Goodwill for a potential tax break. IRS Publication 526 can help guide you through the details of charitable giving.

Job search expenses can be tax deductible

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