A recent job loss can create drastic life changes. However, the effect occurs majorly on the financial side. Last month, a BBC article suggested that unemployment continues to rise in the UK. According to it, the rate has escalated to 4.8 per cent since September 2020.
The article even clarified that the Office of National Statistics claimed 314,000 redundancies in the same period. Coronavirus is one of the major causes for the sudden surge in job loss in the UK.
Fortunately, taking a few steps can help to manage finances when unemployed. These include loans for unemployed, ascertaining goals, managing immediate bills, and making the right choices.
4 Steps to Manage Finances During Unemployment
● Manage Immediate Requirements
Mortgages, rent, electricity, water, and food come under necessities. The expenses for them cannot get managed by ignoring them. Moreover, it becomes even more complicated when there is no option for defaulting or missing on secured loan payments.
Therefore, the first step should include estimating the total savings in the bank. Make sure to make early payments for the required bills, and expenses to avoid eviction or cutoffs. By doing so, you have already made sure that the basics got covered.
The usage of the excess amount can come handy after a few months or can generate profits in a savings account. But make sure to utilize a portion of it for holidays to avoid feeling stressed out during the recent financial crisis.
● Ascertain Goals
Although recent unemployment can provide you with an urge to seek a new job, it also helps to think about ascertaining goals. It means that you can become an entrepreneur, choose a new career, pursue higher studies, or a new free digital course.
There are a lot of options that can help to support the financial needs of such goals. For example, a startup loan can help to furnish a new business, especially with a good credit rating. Similarly, student loans, grants, or other options can provide educational aid.
Moreover, if you think about startup loans, then many financial institutions or banks offer a twelve-month free consultation to establish it. Therefore, the business can learn to grow with an expert in the team at no additional costs.
During recent unemployment, a person can make two choices. It can include staying afloat due to family or peer pressure or making a practical choice for futuristic security and growth.
● Avail Financial Assistance Carefully
The urge to borrow money online due to competitive interest rates is prevalent after unemployment. However, borrowers must avoid them and take loans from credible lenders, banks, or financial institutions.
Availing financial assistance doesn’t only mean seeking guidance from a financial advisor. It also means choosing the right form of loan to get through the financial crisis. Unemployed people have options like no guarantor, personal, and unsecured loans.
However, the interest rate would vary based on credit score, tenure, prior defaults, etc. All the three types of loans often come with high APR because the credibility of the borrower remains unknown, especially if they are first-timers.
Lenders charge high APR to assure that the amount gets covered with hefty repayments. Besides availing loans from online lenders, banks, and financial institutions, borrowers can go to agencies, brokers, credit unions, and other offline centres.
● Make the Right Choices
The final step to manage finances when unemployed includes taking the right choices. It means determining the career path, opting for the most suitable loan option, availing all forms of financial assistance, and sticking to these choices.
For example, starting a business with a startup loan after showcasing your plan to the lender would ascertain a beginning. However, all organizations face financial crises due to some reason or the other.
At this point, the owners must determine the functionality of keeping it afloat. Similarly, choosing higher education would provide aid for futuristic growth, but it wouldn’t make managing the financial situations of the present any more manageable.
Opting for higher education, especially with a family, can prove stressful. However, all problems come with specific solutions. For example, debt consolidation, zero-interest credit cards, and invoice financing can provide financial aids to startups.
Similarly, taking government funds, or grants, and availing food coupons for sustenance can provide food, electricity, water, and roof during recent unemployment. Moreover, explaining the crisis to a lender can even ease the burden of monthly repayments by pausing it for some time.
Simultaneously, surviving the unemployment phase would provide self-confidence and hope for a better future. However, opting for peer-to-peer lending, and short-term easy loans can prove useful to manage finances.
Similarly, asking a friend or family member to co-sign a guarantor loan can ease the borrowing approval rate, even for a startup loan. But borrowers must remember to repay the payments made by the co-signer during their defaults or missing payments to maintain long-term healthy relationships.
Additionally, repaying to the guarantor can prove useful to ask for financial help when required in the future. Besides this, try to cut down on monthly expenses, check online stores to grab the best household deals.
Make use of all coupons, and resell or rent products to get money. By doing so, you can become debt-free in no time and resume a better life than before.