Save Money while Receiving Unemployment Benefits

Saving your money is important more than ever when receiving unemployment benefits. You won't receive those benefits forever, and during hard economic times when the jobless rates are high, you can't be sure when you'll be hired to work again. It's difficult to save money when your unemployment benefits amount to 50 percent or less of your previous income, but it can be done. You need a budget to plan your spending, and hopefully you already have one in place. It needs to be adjusted to accommodate a reduction in income, which means you'll have to reduce your spending in the other areas of your life.

Modify Non-Fixed Expenses

Carefully examine the budget categories that are not fixed expenses. A fixed expense is an item or service that you spend money on that remains the same, month-to-month, such as rent or car insurance. Non-fixed expenses fluctuate, such as what you spend on car fuel, utilities and groceries. Cut your non-fixed expenses as much as you can by changing your current habits, while receiving unemployment benefits. You may decide that your new habits are worth holding on to even after you find a new source of income. For example, buy bulk ingredients and cook more to reduce your grocery bill. Limit your use of heating and cooling systems by reducing the temperature settings and only turning it on when you need it. You'll find extra money to pay for your living expenses and save money at the same time.

Negotiate a Reduction in Fixed Expenses

You can negotiate some fixed expenses, with the goal of paying lower payments while you receive unemployment benefits. Start with your insurance payments. Ask your insurance agent for additional discounts, or lower coverage amounts to a level that still keeps you adequately covered. Get quotes from other insurance companies and switch if you need to. If you're renting, negotiate a lower rent, by offering to take care of maintenance and repair work if you have skills in those areas. Eliminate subscriptions, cable or satellite television and other entertainment that costs you a fixed amount each month while you receive unemployment benefits. Save the money that you would pay to those services after you pay your bills.

Delay or Postpone Payments with No Negative Consequences

There are a few debts that allow you to request a forbearance without any negative consequences. Sometimes delaying payments with permission should be avoided because it can result in:

  • Higher interest rates
  • Higher principal amount (interest added to it)
  • Eliminates future opportunities to request forbearance or deferment

However, if your lender allows you to request a forbearance or deferment for a year, with no negative consequence as long as you pay the interest accumulated at the end of the term, then it may be a good option while you receive unemployment benefits. For example, you can request a forbearance on a federal student loan and pay as low as $5 per month during the forbearance period, which can last up to a year per your request. You would have to pay the interest at the end, and part of your savings can go towards that, or by then you may be generating income to pay for it.

Save money while receiving unemployment benefits, and you'll have money for emergencies. Otherwise, you could find yourself in an even worse economic hardship.

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