image by Simon Howden

Being unemployed can be a low point in many people’s lives, and it is something that almost all of us will all experience at some time. However, the way you handle being unemployed can teach you a number of lessons about yourself, your attitude towards life, and your relationship with money.

When you adjust your attitude, your spending habits and your money management to suit your new unemployed status, you may be surprised at how well you can really live with less money.

Change Your Attitude When You’re Unemployed

There is no doubt that being unemployed can be a depressing and frustrating time in your life. However, to maintain a lifestyle, and overcome this obstacle, you need to take control of your thoughts and attitudes, and live well.

1 – Make looking for a job your job

While it can be tempting to sleep until lunch time every day when you are unemployed, this is not an attitude which will help you find a new job, nor does it mean you are living well. Instead, get up at the same time you would if you were going to work, have a shower, get dressed and prepare to work the phones and computer.

Set up a ‘desk’ whether that is in the spare room or at the kitchen table, just avoid bringing your laptop to bed, or slumping on the couch. Then plan your days, whether you allocate an hour to perfecting your phone spiel, you research new companies online who may be looking for staff, or you go to the library to research résumé writing techniques.

When you have a schedule you maintain your respect for yourself, and are able to command that respect from others, rather than projecting a depressed and desperate image to prospective employers. You can also maintain a sense of achievement, because in planning and filling your day productively, you can still kick off your shoes at 5 pm.

2 – Adjust your expectations

You will also need to take some time to adjust your lifestyle to becoming a one income family or living on unemployment benefits. For example, you may not be able to throw dinner parties or buy gourmet foods, but you can still put dinner on the table for your family. You will also have adjust your social life, avoiding luxuries such as holidays or movie nights out, and while you will need to maintain clothes for interviews, you will have to avoid luxury clothing buys.

3 – Stay optimistic

While getting up and going to the job of job hunting can give you a sense of purpose, the doubts can easily creep back in. That is why you need to actively work at staying optimistic, but maintain a realistic level of optimism. For example, it is alright to admit that the situation is hard, especially as your friends and family will be feeling the same way, because they will be able to offer you advice and encouragement, not to mention search their network for any opportunities.

4 – Stay active

When you are unemployed it is the perfect time to volunteer your time, especially since you may have been looking for ways to give back or help the local community, but never had the opportunity. Now you have all the time in the world and you can generously donate some of it to a local charity. You may even be able to offer your services to businesses or support groups, and this can also double as networking because you never know who you will meet.

How to Save Money When You’re Unemployed

Often when you are unemployed, saving money can also mean preserving the money and assets you still have, and there are a number of ways to save your money when you’re not working.

1 – Maintain health coverage

Your health is your most important asset, and you must stay healthy in your job search so if you had health insurance through your old job, make sure you buy continued coverage under COBRA. You will usually have 60 days from the time you lose your job to sign up under COBRA but since the cover is retroactive you don’t have to make the decision right away. Plus, if you get another job quickly you won’t need this cover, as COBRA can be an expensive option. If you are unemployed for an extended period of time, you may find that an individual health insurance policy offers a better deal, especially when you choose a high deductible.

2 – Protect your emergency fund

While you have saved up to build an emergency fund for times just like this, avoid dipping into your savings when you are unemployed, because it will be harder to replenish them without an income. Instead, apply for unemployment benefits as it won’t affect your credit, and it is different from being on welfare because your employer will have paid into the system on your behalf.

The sooner you apply for unemployment benefits the sooner you will receive your first payment which is important to know because there can be a two to three week waiting period from the time you apply, not from when you first lost your job. The typical unemployment benefit lasts 26 weeks however, when the jobless rate is higher in your state, the benefits can be extended for another 13 to 20 weeks.

Unemployment benefits are not enough to replace your previous income and are on average $270 a week. You will also usually only qualify for benefits if you lost your job because of external factors, not because of your performance or because you quit.

While your unemployment benefit can cover a few expenses, you need to be careful how you spend the little cash you have. While it is usually a good idea to focus on paying down your debts, when you are unemployed it is more important to save that money. For example if you have been paying more than the minimum into your home loan, divert that extra into a savings account. it can also be useful to negotiate with your credit card provider for a lower interest rate, or use a balance transfer credit card.

When it comes to paying your phone or water bills, most utilities companies offer a hardship program which means low cost services for people who are on a low income.

How to Stop Spending When You’re Unemployed

When you get into the habit of having a regular income, it can take some time to adjust. Therefore, implement some good habits in the following ways.

1 – Have a working budget

When you have a limited amount of money coming in, you need to know exactly where it is going out again, so you need a working budget, which tracks your day to day spending. This can be tracked as simply as using a pad of paper, a spread sheet or your mobile phone, whichever suits you. Then not only will you know exactly how much money you have left at any one time, you’ll also be able to see in black and white, all of the places you can curb your spending.

2 – Manage your expenses

While all of your bills may be marked DUE, some will be more important than others. Start by arranging your bills in order of importance, for example mortgage would be at the top, while magazine subscriptions will be at the bottom – this also makes for the perfect chance to see even more expenses which are luxuries and can be cut.

You should also list your bills on another sheet titled ‘Worst Case Scenario’ for if your finances become really dire. On this list should be your mortgage, your utilities and your transport so you can make it to interviews and at the bottom of this list are your unsecured debts such as your credit cards and student loans, because if you don’t pay these, there is nothing the providers can repossess.

How to Make Money When You’re Unemployed

Just because you’re having trouble finding paid work in your field, doesn’t mean you can’t still bring in some money.  Look at ways you can sell your unwanted or unused items by organizing a garage sale, or selling items online on sites such as Craigslist or eBay.

You could even rent out a room of your home to bring in some money from board. Or if you are a handy person you can make some money by doing odd jobs for people in your neighborhood. There are also jobs such as house sitting and dog walking which can keep you active, out in the community, and earning money for your family.

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