How To Manage Your Finances During Unemployment

Maybe it comes from having parents who scrupulously watched every penny they spent (motivating me for some reason to do the exact opposite), or maybe it’s just me. Either way, savings have never really been my strong suit, and I own more pairs of unnecessarily expensive shoes than I’d care to admit. 

I’m not alone. In 2018, 40% of Americans admitted they wouldn’t be able to cover an emergency expense if it were to come up. In a separate poll, 90% of Americans said their finances impact their stress levels. 

With the economic ramifications of a global pandemic and possible recession, the unemployment rate a mere five months ago grew to 13%, encompassing nearly 20.5 million Americans. Recently, I became one of them and decided (motivated largely by necessity) to end my bad relationship with my finances. Here’s what I’ve learned.

Do You Know Your Money Personality?

Raise your hand if you knew there were five distinct personality types when it comes to handling money. I sure didn’t.

I would definitely characterize myself (pre-unemployment, that is) as a spender. A spender has a difficult time prioritizing savings and seeing money as a vehicle for long-term goals. They also utilize their finances to achieve satisfaction and are happiest buying things or spending money on others. Feeling called out yet?

The polar opposite of a spender is a hoarder. A hoarder prioritizes their budget and saves easily, usually making it their main focus. However, a hoarder also sees most purchases as unnecessary and has a hard time spending on themselves or others. 

A hoarder also sees most purchases as unnecessary and has a hard time spending on themselves. 

Or, you might be an avoider. An avoider leaves their bills and other important financial responsibilities till the last minute. They feel overwhelmed by the idea of money and use evasiveness to avoid confronting it. They usually have no idea how much is in their checking or savings account at any given time. 

An amasser is someone who feels almost too comfortable with money. Whether it’s investing, spending, or saving, they’re most content when they have money at their disposal. But they also equate their financial situation with their self-esteem.

Last but not least, on the more philosophical end of the spectrum, is the money monk. A money monk equates money with greed and corruption, and avoids having too much or even using it. A money monk better identifies with having modest means even if they’re more well off, and tend to butt heads with spenders and amassers.

An avoider has no idea how much is in their checking or savings account at any given time.

You might be one or a mix of some of these types, but learning which traits you most identify with is crucial in understanding how we as people view and treat money, especially in situations when money is tight.

Learn from the Best

When I was laid off from my job, taking control of my finances became my top priority (in addition to job searching).

I turned to social media, different threads and internet forums, and even my family members for unique tips and tricks to try (and dating someone who is smart with money is something I can’t recommend enough). 

I also turned to the king of financial advice himself, Dave Ramsey. Love him or hate him, he’s extremely knowledgeable on how to approach personal finance, especially when the chips are down and you’re not generating income.

Prioritize your “four walls,” or basic necessities, and focus on those priorities alone. 

Specifically, his four walls principle is what I initially utilized when I sat down to generate an unemployment-based budget. The concept is extremely simple: prioritize your “four walls,” or basic necessities, and focus on those priorities alone. 

This means everything like trips, movies, or the fun stuff takes a back seat to what you need to survive. It also means, as Ramsey advises, paying the bare minimum if you have loans or credit card debt.

And while you’re job hunting, consider a part-time gig or side hustle. Any income, no matter how small, is better than none at all.

This helps create a basic, barebones budget that’s easy to follow, and one you can individualize according to you or your family’s needs. 

Consider a part-time gig; any income, no matter how small, is better than none at all.

Here’s an example: As a 23-year-old woman with no dependents living in a shared space, my four walls which I budget for are my transportation, rent, utilities, and food expenses. Everything else unrelated to those categories (including the shoes, sadly) has to go. 

Act on What the Experts Tell You

Something I’ve noticed over the course of this journey is that talking about finances feels uncomfortable. I’ve also noticed, through binging tons of Ramsey’s videos and listening to his show, that people who commonly ask for financial advice are usually, for whatever reason, hesitant to take it. I can strongly identify with both of those. 

But both of these characteristics are counterintuitive to the entire practice of taking control of your finances. 

Money doesn’t have to be an awkward topic; in fact, it shouldn’t be. Avoiding conversations altogether, or rarely checking your bank account gives the topic more power and influence than it actually has. Money isn’t some mystical element that we should be scared of. Whether we’re living comfortably or barely scraping by, transparency about money can help us accurately confront where we are and consciously work towards our goals.

People who ask for financial advice are usually, for whatever reason, hesitant to take it.

We’ve also never been more privileged than we are now, in an internet age of personal finance apps and programs geared towards achieving financial freedom. 

(As a visual person, I really like Mint by Intuit which helps me visualize my monthly budget, accounts, and goals.) 

Speaking from experience, it can be difficult to break our toxic habits, and maybe we’re asking for help but not really listening. If unemployment has taught me anything at all, it’s to listen up to what I’m being told.

Closing Thoughts

If there’s also a piece of advice I can give, it’s this: Don’t wait for a rainy day to buy an umbrella. 

I shouldn’t have waited until I was laid off to have an honest look at my finances, and neither should you. There’s nothing stopping you from creating new goals, new budgets, and/or doing things differently, depending on what works best.

Being laid off was one of the most debilitating and demoralizing things I’ve ever experienced. If you’ve been there, you know. But if there’s a silver lining, it’s that I’ve been basically forced to take control of my financial freedom. It takes the bad times to make you appreciate the good, and when new employment opportunities come around, I’ll be better equipped for success.