Most unemployed people would ask how budgeting would help. The tone of the question would be one of exasperation. Yet a budget will probably be even more effective than when they were working.
Maintaining a budget when there is steady income allows flexibility in spending. Saving goals can be set in order to fund different types of expenses within your means. However, when you lose your normal job, until you can find another, survival will be based on managing the limited unemployment benefits.
Unemployment benefits result in a dramatic fall in income. If you were in the habit of budgeting, you would have already learnt some basic money management skills. Then, do not cast away these skills just because there is a reduced level of income.
The feeling of never having enough money can be alleviated if you have worked out an explicit budget and stick to it. This is when you need your strongest budgeting muscles. Previous spending priorities must be revisited and reset in order to match the lower level of income.
It is the myth that to budget, one needs to be working for a living. The reality is that as long as you have a source, or potential source of income,
then budgeting is useful. Unemployment benefits provide a source of income. Then, the next step requires you to examine your resource skills and talents to see how you earn additional income. Suggestions for finding alternate employment will be the subject of the next article.
Further, you may have been setting aside funds toward this rainy day. During this period of unemployment, you can draw on this rainy day amount to balance your budgeting as needed: either by just drawing on the interest or dividend amounts in the first instance, or, given more dire circumstances, by drawing on the principal as well.
It is remarkable how this income side of budgeting is so often overlooked. Indeed, if this income side of budgeting was given more attention (that is, finding novel and legitimate ways of expanding earnings) then some basic budgeting problems would be eliminated. Here are six budgeting ideas for when you are unemployed:
B – is for budgeting which means to maximise all sources of income, and to minimise all expenditures.
U – is for under-spending. It is so important to live within the current level of earning. The intent is to stretch your income to keep it in line with minimum spending for as long as possible. This helps to cushion the uncertainty of when you may get another job.
D – is for delayed gratification. Waiting until an expense can fit into a future, more stable financial plan makes more sense than creating untenable stress.
G – is for giving, even if it is just some of your belongings, some of your time, a letter or a card occasionally. Charity is a law of financial prosperity.
E – is for earnings. Whenever possible, secure your savings and only draw on the earnings in balancing your budget. In a way, your earnings are working for you. When you start to deplete your earnings, you are un-employing those workers.
T – is for trial and error. Your friend’s budget will likely not suit you since you may have different values. Through trial and error, you will get the chance to reconcile your values with your budget. A period of unemployment may be when you best figure out the underlying values that guide your income-gathering and your spending habits.
