How To Take Charge of Your Finances After a Job Loss

Feeling in control of your finances is one of the best feelings in the world. There’s nothing better than going to sleep at night knowing you have a roof over your head, food in the fridge, and that your bills are paid for. So when an unexpected job loss or change in income occurs, it can be be destabilizing, to say the least.

The truth is, none of us has a crystal ball that we can look into to predict the future. So this begs the question: Can we truly prepare financially for unforeseen circumstances?

This is something I recently asked Jesse Mecham, the founder of YNAB (You Need A Budget). Throughout our conversation, we discussed the best ways to deal with financial instability, prepare for the future, and alleviate money stress.

So if you’re currently struggling financially, you’ve come to the right place. Regardless of what you’re going through—whether it’s dealing with a job loss or change in income or battling inflation—Mecham’s advice can help you better prep for the future and relieve some of your financial woes. Keep scrolling to learn more.

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How to take charge of your finances after a job loss:

1. What’s the first thing you recommend doing after experiencing a job loss or sudden change in income? Are there certain ways to reorganize your life to account for this drastic change?

Jesse Mecham: “I know job loss and change of income is scary, and there is probably a real temptation to bury your head in the sand and hope it all works itself out, but your next steps can have a huge impact. First, think through your expenses, which have likely increased over time because that is what happens when we get comfortable. Next, identify your biggest priorities (which may not be all that exciting at this juncture and likely includes things like food and shelter).

Think hard about what expenses you’d be willing to trade to pay for what’s most important. What expenses would you be willing to trade for peace of mind? The less stressed you are about money, the less certain sacrifices will feel like a loss; instead, they will feel like time granted.”

2. As nice as it would be, none of us can predict the future. What do you think is the best way to prepare for unforeseen circumstances?

Jesse Mecham: “Most people aren’t very good at preparing for unforeseen circumstances because they think they can’t predict the future, but what if I told you you could? You may not be able to anticipate a job loss, but one thing you can anticipate are your expenses. So create a plan for how to cover them, even if your income changes. The best way to prepare for ‘unforeseen circumstances’ is to break up larger, infrequent expenses and treat them like monthly expenses.

For example, you might not know when the car is going to break down, but at some point you know it will. Don’t avoid the notion of it and then act surprised. If you put a little bit of money away for car repairs every month, when the car breaks, it doesn’t feel like an emergency at all. It might even feel like you can predict the future!”

3. Do you have any advice on what should be done to alleviate money stress moving forward?

Jesse Mecham: “Money is stressful for a lot of people, but I think more often than not, the most stress comes from simply not knowing. If you don’t know where your money is going or how much you have or what it needs to do next and whether or not there will be enough, then yes, you will be stressed.

There is another way. I teach people to look at the money they have right now and ask themselves: What does this money need to do before I get paid again? Then, assign every dollar a job based on whatever matters most to you. Having a plan will help you feel in control of your money and give you permission to actually enjoy spending, no guilt or stress required.”

In conclusion…

Dealing with any sort of financial challenge can be scary, but the best thing you can do is take charge of your finances. Take a look at your expenses; identify what your biggest priorities are. Then, begin planning accordingly. Be sure to assign every dollar a job and account for a rainy day; because unexpected things will pop up. You never want to be in a position where you can’t eat until you get paid again.

There are very few things we can control in life, but finances is one of them. Paying attention to your finances and knowing where your money is going can help alleviate unwanted money stress. Making these changes may feel like a big deal in the beginning, but they’ll be worth it in the end. Avoiding your finances or turning a blind eye will only make things worse for you.