You may be working hard, looking for your next employment opportunity, but your bank account isn’t reaping the benefits of your labor. Job searching is a tough business, and until you finally secure employment, it’s a pretty thankless process- financially and otherwise.
Don’t let a desperate need for steady and certain income be the reason you accept a job offer. Maintain your financial viability throughout the job search process so that you have the option to hold out for an opportunity that you’re actually excited about, rather than simply accepting the first thing that comes along.
Here are three essentials for staying financially fit during your next job hunt.
Utilize Free and Low Cost Resource. Between purchasing professional attire, taking skill building classes, and traveling for interviews, the job search can prove to be a major financial drain. Reduce your costs as much as possible by making the most of free and low cost resources. Libraries, for example, often offer classes that teach basic professional skills like Excel. Websites like http://www.trud.co.uk/birmingham/jobs/ aggregate employment information so that you can access job details without wasting time or money. Alumni associations and college career service centers also have vast and varied resources for any job seeker. Don’t get suckered into shelling out the big bucks for tips and tools you can get for free or cheap elsewhere.
Create a Financial Plan. Never assume that your job search will be short and sweet. Put a financial plan in place to maintain financial viability during your time of unemployment, however long it lasts. Start by identifying all sources of cash flow- severance from your last job, unemployment, side income streams, etc. Then calculate your monthly expenses. Cut back as necessary to keep those expenses well within the parameters of your estimated cash flow. You may need to dip into your savings reserves to maintain a minimum standard of living, but don’t raid your emergency fund just to subsidize an indulgent vacation or other superfluous expense. Unemployment is as good a time as any to separate your wants from your needs and really assess your priorities.
Rebuild Your Reserve. There’s nothing like a bout of unemployment to teach the importance of a good sized emergency fund. Once you’ve completed your job search and started receiving regular paychecks again, prioritize payments to yourself first. Consider maintaining your paired down unemployment budget for a few months as you work towards rebuilding your cash reserves for future emergencies- like job loss. Experts recommend having anywhere from six months to a years worth of living expenses saved up in an accessible, liquid savings or money market account. While retirement accounts should also be funded, tapping into those savings during an emergency can result in a loss of one-third to one-half of the withdrawal in taxes and penalties. In other words, keep your emergency reserve money accessible so that you don’t lose a big chunk of it to fees, but not so accessible that you blow through it all the moment life starts returning to normal.
Join our newsletter
Subscribe to get the latest "Engineer Your Finances" content via email.