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It should be fairly obvious that people
who do not have jobs need to be particularly cautious about spending
whatever money they have, yet, surprisingly, many people in this
predicament have difficulty curbing their spending and end up making an
already dire situation even worse.

Maintaining a budget is difficult under
normal circumstances, but the idea of budgeting when you are unemployed
is an even greater challenge. One of the first things you should do to
protect yourself financially at a time like this is to draw up a budget
and try to stick to it.

Do you have an emergency fund?

Hopefully, you have an emergency fund
in place that can support you for at least a few months. Experts have
traditionally recommended a three-month emergency fund but nowadays,
with the length of time it takes to find work, it is prudent if you
can, to look at setting aside between six months to a year of expenses
saved, in the event of job loss.

Even if you are one of those who
managed to build a decent emergency fund, find ways to cut back on
utilities, groceries, entertainment, etc., to make sure it can last as
long as possible. If you do not have any emergency savings, make this a
priority when you get a job so that you are better prepared for any
future financial crisis.

Track your expenses

Gather your bank statements and find
out how much money you have and where it is all going. List your daily,
monthly, weekly, and yearly expenses from your daily newspapers to your
mobile phone bills. Try to do this for a month, writing down as much of
your spending as you can.

This will help you to identify areas
where you can cut back. Involve your spouse if you are married; it is
important that the family is fully aware of the situation and fully
engaged in the plan, but without alarming the younger family members.

Are you in debt?

If you are having difficulty paying
your bills on time or you are in debt, contact your creditors
immediately. It may be possible, if you have had a good track record,
to restructure the loan and they may offer you a modified payment plan
that will reduce your payments to a more manageable level. Don’t wait
until they give up on you and decide to foreclose; you could lose your
car or even worse, your home.

Insurance

If you received health insurance
benefits for you and you family from your former employer’s group
health insurance plan, you will have to find a way to get medical
insurance in place as soon as possible. You cannot afford to be caught
without insurance should you or a family member suddenly falls sick.
Shop around for a policy that will cover at least the basics.

Luxuries versus necessities

Look critically at what you absolutely
must have and what you can do without. It will be quite surprising to
find that there are several items that you do not really need and can
forfeit for at least a while, without altering your lifestyle
significantly.

Here are a few examples of things that many families tend to ignore when they need to cut back on luxuries or non-essentials:

Food and housing should always be
priorities in your essential spending. However, if you are in the habit
of eating out often, you will save some money by eating at home more
regularly. Many of us eat far too much anyway, and losing some calories
might well be one of the advantages you reap from your budgeting
exercise! Whilst there may be ways to cut back, do not jeopardise yours
or your family’s health.

Many people consider cable television
to be a necessary utility and spend quite a lot on subscriptions. This
might be a good time to reconsider and scale back your multichannel
package, considering the fact that you watch less than half a dozen
channels on a regular basis.

As soon as you get a job or your
finances improve, you can re-evaluate those non-essential services and
renew your subscription accordingly. This also applies to other
subscriptions including multiple club memberships and magazine
subscriptions.

Your mobile phone is an essential
expense, but one can carelessly run up outrageous phone bills if you
don’t carefully monitor your usage. Set yourself a spending limit and
try to use it just for essential calls. Likewise, if you have a
generator, limit its usage, as fuel costs can be exorbitant and
unpredictable.

Introducing practical solutions, such
as energy saving bulbs and invertors, and encouraging the family to
turn off the lights when they leave a room should reduce your bills
considerably.

Do you have any other sources of income?

Do you receive any passive income from
dividends or rent from time to time? If so, now is the time to look at
such income critically and see how much it adds up to and when you
actually receive it, so that you can plan accordingly.

Maybe you have enough coming in to explore other options, such as furthering your education, or starting your own business.

Today, a job search can take some time,
with thousands of people out there looking for the same job openings.
Even if you have to take a job that requires minimal skills to keep you
afloat until something more appropriate comes in, remember it is only
temporary; you will still be looking for a job that matches your
background and skill set.

What skills and hobbies can you put to
good use now? Be creative and consider flexible part time, freelance,
or voluntary work to help you get a foot through the door and leave
enough time for your interviews and earning you some money at the same
time.

The hardest thing about budgeting is
sticking to your plan. Even if you fail miserably the first month,
don’t be discouraged. Just make some adjustments and keep trying.
Learning how to budget in trying times can be a blessing in disguise,
as it gives you a clear view of where you are over spending and where
there is excess waste.

Even when you are out of this rough patch and earning again, such
habits will have a lasting impact on your finances and you would have
learned some timeless lessons in money management.