Plan Ahead: How to Financially Prepare for the Possibility of Unemployment
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Losing your job is not an event in your life that you really plan to do. In fact, in many situations, the loss of a job can be a complete surprise to the one that has to be let go. This is especially the case when a company shuts its doors for good or decides to lay off a group of people due to harsh economic times. Whatever the case, the loss of a job can be a completely devastating financial disaster for many families.
Having said this, even though this new wave of job loss has become more of the norm and not the exception, this fact of life needs to be understood as a possibility that can be prepared well in advance. To protect your family and your finances in the event that this possibility does affect you, here are a few things that you can do to prepare.
Get Out of Debt
When you lose your job, one of the first things that people worry about is how they are going to pay their bills. In many cases, the biggest problem is paying off debt that comes from high-interest credit cards. This is not only a big problem but one that can rip your credit into pieces overnight. To avoid these concerns, you can prepare now by paying off your debt completely and leaving without the credit cards.
Make Sure You Have Buffers for Insurance Coverage
You need to also consider ways to handle insurance coverage losses. In short, you need to have a buffer to cover this period of time. For instance, you may want to look into investing in accident & sickness insurance. This type of insurance can be helpful to families in special situations and will pay a lump sum amount in certain cases.
Identify Expenses that Can Be Cut Now and Later
Living successfully through this temporary situation is one of the keys to thriving well throughout life. Because some finance problems are foreseeable, having an effective plan for a different way of living financially is one of the best things that you can do for your family. While this plan may appear to be uncomfortable from your normal spending habits, it is a necessity for times when economic times get difficult. For instance, you should cut certain unnecessary expenses now in order to save money to deposit in your nest egg account. You should also have a plan of expenses that can easily be cut out until you find another job to replace the job that you lost.
Emma Sturgis is a freelance writer based out of Boston, MA. She writes most often on health and education. When not writing, she enjoys reading and watching film noir. Say hi on Twitter @EmmaSturgis2
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