By Renee A. Hanson, Wealth Advisor at Ameriprise Financial
If you find yourself out of work, there are several things you can do to help safeguard your financial situation until you land your next job, including:
- Overhaul your budget — Every penny counts. So look for large and small ways to reduce expenses. For example, cut back on cable TV, mobile phone and Internet services, use coupons and compare prices and shop for items where they are least expensive.
- Apply for unemployment benefits — If you don’t receive a severance package, unemployment benefits can financially help bridge the gap until you’re re-employed. In most states, you can apply at the local unemployment office or online, making it convenient and fast.
- Withhold taxes from unemployment benefits — Taxes aren’t automatically withheld from unemployment benefits, so set aside money to pay your taxes later or elect to have taxes withheld from your benefits if your state offers this option. Depending on your situation, you may need to make estimated quarterly tax payments. Talk with a financial or tax professional to better understand your tax obligations.
- Obtain health insurance — If you currently have employer-sponsored health insurance, a federal law known as "COBRA" entitles you to continue receiving that coverage at your own expense for up to 18 months at group rates upon termination of employment. Your employer or plan administrator will provide you with an election notice to enroll in COBRA coverage. The notice will include the date your COBRA coverage becomes effective, when it ends and what it costs.
- Become resourceful — Look around your household to see if you have items you are no longer using that you can sell at a garage sale, online or at a local consignment shop.
- Track deductible expenses — Certain job search expenses may be deductible, for example travel expenses for your job search and interviews. So, keep your receipts and discuss them with your tax professional.
- Leave your retirement account alone — If possible, avoid cashing in your 401(k) or retirement plan balance. This will enable you to avoid early withdrawal penalties and continue to benefit from potential tax-deferred growth.
For help making sound financial choices, consult a financial professional. He or she can help create strategies to meet your short and long-term goals regardless of your employment situation.
Do you want more helpful advice on managing your finances? Become a member of the Fresh Start Community of women today: www.wehelpwomen.com. Membership gives you exclusive access to all of the exciting & interactive workshops.
Renée A. Hanson, CFP®, CEP®, CDFA™, CFS, is a private wealth advisor with Hanson, Ayala & Associates, a private wealth advisory practice of Ameriprise Financial Services, Inc. Her passion is in helping women achieve their dreams and financial goals, regardless of life’s many obstacles. Renée is licensed/registered to do business with U.S. residents only in the states of AZ, CA, CO, GA, IA, IL, MI, MN, MT, NH, NJ, NM, NY, OH, PA, SC, TX, VA, WA, WI. Please visit: www.reneehanson.com to learn more.
Ameriprise Financial does not provide tax or legal advice. Consult your tax advisor or attorney.
Brokerage, investment and financial advisory services are made available through Ameriprise Financial Services, Inc. Member FINRA and SIPC. Some products and services may not be available in all jurisdictions or to all clients.
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