Lost your job? Money first steps

Resources · Life and money · 5 min read Building

Key points

• Take a breath before any big money moves. Get a clear picture first.
• Work out your “runway”: how many months your cash covers your essentials.
• Cut back to essentials early, while you still have choices.
• If repayments look out of reach, free, confidential help exists.

Lost your job? First, find out what’s coming in

Losing a job is a shock. A rush of panic about money is completely normal. But the first few days are for gathering information, not making decisions.

Start by listing every amount you’re owed or might be able to claim.

There’s your final pay: your last wages, plus any unused holiday or leave that gets paid out. Check that last payslip carefully. You may get redundancy or severance pay, and whether you do, and how much, depends on your contract and the law where you live.

Then there’s government support. Many countries have some kind of unemployment or jobseeker payment. The names, rules and waiting periods differ, sometimes even between regions of the same country, and some have a time limit for claiming. So it can pay to check early.

Finally, count any other income that will keep arriving. A partner’s pay. Side income. Anything.

Next to each one, write the date it’s likely to land. Money that shows up in six weeks won’t pay rent due next week.

Work out your runway

Your runway is how long the cash you can reach will cover your essential costs. Right after a job loss, it’s the single most useful number you can have.

1. Add up the cash you can reach: savings, your everyday account, and any final pay you’re sure of.
2. Add up your essential monthly costs: housing, utilities, food, transport, insurance, minimum debt repayments and medicines.
3. Divide the first number by the second.

Example. Say you have $6,000 in cash and your essentials come to $2,400 a month.

$6,000 ÷ $2,400 = 2.5 months of runway.

Trim your essentials to $2,000 a month and the same $6,000 lasts 3 months. That extra half a month can take real pressure off a job search. (The same maths works in any currency.)

Expecting income, such as government support? It stretches the runway further. Take it off your monthly costs before you divide.

Move to an essentials-only budget

Cutting back is hard, especially when you’re already stressed. Do it anyway, and do it early. It buys you options later.

Pause the extras rather than just trimming them. Streaming, memberships and takeaway can usually be stopped now and restarted later. Then look at the big costs, like housing, the car and your phone plan. That’s where the large savings tend to be, even though they take longer to change.

Go through your direct debits and automatic payments so nothing bounces. Missed payment fees add up fast. And keep paying for the essentials that protect you. Insurance, rent or mortgage, and utilities usually come first.

If you share money with someone, sit down together. One shared plan beats two people quietly worrying in separate rooms.

Think carefully about debt

When your income stops, debt repayments can quickly become the hardest part.

Keep making at least the minimum repayments if you can. Missed payments can bring fees, higher interest and marks on your credit report.

Be wary of borrowing to fill the gap. A credit card or a short-term loan can feel like a bridge. It can also turn a few hard months into years of repayments. Some people decide a small, planned amount of borrowing is worth it. Others would rather cut deeper. Which way makes sense depends on how long you expect to be out of work and what the borrowing costs.

Watch out for dipping into retirement savings too. In some countries you can take money out early in hardship, but there can be taxes, penalties or long-term costs. Find out the full cost before you decide.

If you can’t see how you’ll cover your repayments, you don’t have to work it out alone. Free debt help is available in many countries. It’s confidential and costs you nothing.

Look after your health insurance and other cover

Some cover comes with the job. Depending on where you live, that could include health insurance, life insurance, income protection or other benefits. There may be ways to keep or replace it, each with a different cost. Check your employment paperwork for what ends and when, so nothing lapses by surprise.

Look after yourself, too

Money and mood are tangled together (more in money stress and the mental load). A job loss can bring up shame, fear and anger, often all at once. None of it means you’ve failed.

Keep a simple routine, even with no work to go to. Pick one fixed time each week to look at money, instead of checking your balance every hour. Talk to someone you trust about how you’re feeling, not just about the numbers. And if you’re struggling to cope, reach out to a doctor or a local support service.

Common questions

What should I do with my money after losing my job?

Many people start by listing what’s coming in, working out their runway and switching to an essentials-only budget. The first few days are for information, not big decisions.

How do I work out how long my savings will last?

Divide the cash you can reach by your essential monthly costs. For example, $6,000 with essentials of $2,400 a month gives you 2.5 months of runway.

Should I use a credit card if I’ve lost my job?

It can feel like a bridge. But it can also turn a few hard months into years of repayments. It depends on how long you expect to be out of work and what the borrowing costs.

Try it

Use the emergency fund calculator to see how many months your savings cover. If you carry debt, you can also find your Freedom Date and see where you stand.

General information only, not financial advice. Your situation is your own.