Planning Your Finances for Unemployment

by Catherine Tansey

A woman on her computer and on the phone

Thirty three million Americans have applied for unemployment since the COVID-19 crisis began, and job losses are expected to rise. With revenues bottoming out and whole industries shutting down, being laid off is likely reality for many today. 

The best time to prepare for joblessness is while you’re still employed. Create a plan now to prepare for the uncertain employment landscape of the looming recession. You’ll want to consider finances, but other employer-sponsored or linked benefits like health insurance and retirement accounts as well. 

Psst… We just gave a webinar on this topic. You can watch it for free here.

Before you’re laid off

Take an honest look at your finances

“Consider what the worst-case scenario would look like for your finances if you lost your job,” says CFP® Kristy Runzer. “Do you have cash in savings that you can use to keep afloat?”

If the answer is no, it’s time to fortify your savings, fast.

Increase your take-home pay to shore up savings

Increase your take-home pay by lowering retirement contributions and other auto-deductions, like health savings account (HSA) allocations. But with one caveat — if there’s company match, consider lowering other auto-deductions first. Examine your W-4 status to see if changing your tax withholding makes sense in order to keep more money in your pocket, now.

Double-check retirement info

Don’t make any hasty investment allocation changes. Make sure you can access your workplace retirement plan information outside of work. And double check that your username, password, and PIN won’t change with a shift in your employment status. 

Consider credit cards

If you already have 6-12 months of living expenses saved and are carrying a high- interest credit card balance, it may make sense to pay off your debt now. If you need to focus on saving for living expenses, a 0% APR balance transfer might be the right move for you. Many of these introductory offers allow 12-18 months at zero interest.

After you’ve lost your job

Apply for unemployment 

You’ll need to apply for unemployment benefits in the state that you worked, not where you live. And keep in mind that most states require you to re-file you a certifying claim — certifying the dollar amount you earned in that period — biweekly or every week in order to confirm your eligibility for benefits. Failure to do so means you’ll lose your eligibility and have to start the process from scratch.

Be sure to check your state’s website for specific filing requirements. Under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, you’ll also be eligible for an additional $600 per week from the federal government. 

Related article: All the Benefits You Can Take Advantage of Due To Coronavirus

Take a look at your debts

All federally-held student loan debt has been temporarily suspended through September as part of the CARES act. But if you have other debt you were working to pay off — like a car loan — you may consider lowering your monthly payment to the minimum. 

“If you don’t have a lot of cash in savings and a job loss would leave you feeling strapped for cash, it may make sense to drop debt payments,” says Runzer. 

Review housing cost options

If you own your home

If you have a mortgage and are struggling to make payments, contact your lender. In addition to traditional deferral and forbearance, there are additional benefits made available to mortgage holders through the CARES act. Specifically, if you’ve suffered financial hardship due to the pandemic, you’re eligible for a 180-day forbearance with an additional 180-day extension. 

If you rent

Contact your landlord or property manager and ask for leniency due to the pandemic. Get all agreements in writing and be ready to negotiate. 

Look into health insurance options 

Losing your employer-sponsored healthcare during a pandemic is not ideal. You have a few options…

  • If you are in a domestic partnership or marriage, see if you’re eligible to be added onto your partner’s coverage.
  • Check with HR for the date that your coverage expires and prioritize securing healthcare to minimize your gap in coverage.
  • Check your state’s marketing or apply through You’ll be eligible under the Affordable Care Act for a special enrollment period, as losing employment is a qualifying event, but you’ll need proof of prior coverage duration and proof of employment termination. Additionally, you must apply within 60 days of your qualifying event.
  • COBRA is another option, but an expensive one at 2-3x your previous premium cost.
  • You may qualify for Medicare as many states adopted expansion of the program under the ACA. 

Getting laid off is never easy, but there is some comfort knowing many others are in the same situation due to these unprecedented times. By taking control of your finances with a solid plan, you can navigate the uncertain waters of unemployment more confidently. 

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