You probably do not like to think about losing your job. However, in the current economic environment it is a good idea to be prepared. The most recent release of initial jobless claims underscores this reality. You may have survived with your job so far, but will you survive what’s coming? And if we really do end up in a double dip recession, it means that now is the time to begin preparing. Here are some things to consider as you shore up your finances:
Create a Plan for Unemployment
You never know if and when unemployment will strike, and unemployment benefits will only take you so far. The best strategy for dealing with unemployment is a proactive strategy, and these tips can help you plan for the worst.
For many, this is a necessity. Your emergency fund can help you through tough times by giving you a place to turn if you need help meeting expenses. Consider how you might build up a financial cushion in the form of an emergency fund by setting aside money each pay check in a high yield savings account.
It is important to realize, though, that any emergency fund is unlikely to last forever. It can help you to get through some of the tough times, and help you pay the bills, but unless you have a huge emergency fund, you are going to need to make some other preparations for unemployment.
Develop Income Diversity
Is all of your income from one place? If so, it might be a good idea to begin developing a little income diversity. Consider starting a side business with a hobby as a basis, or setting up a web site that can generate affiliate income. If you are really worried about the stability of your day job, you or your life partner can consider getting a part-time job of some sort. You can also consider income investing as a way to begin developing a little income diversity. While you may not be making a ton of money from these other sources each month, they can establish income streams that can help cushion you if you lose your regular job. And, as long as you have a job, you can use the extra income to pad your emergency fund!
The recession has taught many the importance of frugal living. Even those who still have jobs right now should consider downsizing their lifestyles — at least a little bit. Living modestly and within your means will ensure that you have fewer expenses to meet if you lose your job. It means making less of an adjustment in the future, because you are already adapting right now. Additionally, frugal living means that you can set more money aside for the future. Even if you decide that drastically cutting expenses is not necessary at this point, you can still make a list of items to cut so that you are prepared in the event of a job loss.
Keep Yourself Marketable
Keep up to date on the skills you need for your profession. Consider developing new skills that might serve you well if you need to switch jobs. Periodically update your resume, and do what you can to keep yourself valuable to your current employer (so that you have less worry about layoffs). You should also keep your networking contacts fresh. Keeping up with your business and personal relationships while you still have a job can prevent you from scrambling when you become unemployed.
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