How to Manage your Finances when You’re between Jobs

There is no shame in being unemployed. It happens. As a matter of fact, all of your successful friends have experienced the situation at least once, if not many times. Think about it, during his election campaign, even the president is unemployed. So if he’s allowed to be, so are you.

You’re mental state is so important in passing through a transitional period because it dictates your actions. If you get depressed, you are less likely to invest in self-development and seeking out opportunities and more likely to waste your financial and psychological funds on comfort activities and foods.

This is an extreme no-no. Unless you have made the decision to take a well-deserved holiday, you should allow yourself as small an amount of down-time as possible. Down-time, by nature, leads to more down-time, especially when you don’t have something that requires your urgent attention waiting at the end of a specific timeline.

The question is thus begged, “If I am in a productive frame of mind, how do I manage my finances while searching for a new job?” Well, it all depends of how much liquid assets you’ve accrued and how long you expect to be unemployed.

The basic law of economics dictates in shining simplicity: “Don’t spend it if you don’t got it.” So obviously your first priority is to do a quick situation analysis. Ask yourself these two questions.

1. Will my current balance cover my bills and repayments (mortgage, credit card, etc.) for the next while
2. How long will my current cash supply cover my basic living needs

Having now considered your existing finances, you need to ask yourself, “What do I want to do with what I’ve got?” If you’re blessed with a large capital base and low fixed costs, you might be able to afford a relatively affluent lifestyle. Regularly going out with friends, dining at extravagant restaurants, these might be viable options for you and your social situation might demand these activities, but they’re far from advisable.

Even if you have a good amount of cash reserves saved up, using them on anything other than a “once-a-week treat” is a common and sometimes fatal mistake. Firstly, going out on the town too much puts you in “holiday mood.” Like we said, your state of mind is the most important thing because it dictates your actions. So if you feel like you’re on holiday, it will come out in your efforts in looking for work, and especially in interviews, leading you to losing the jobs that you really want.

Instead of dining out, tell your friends that you finally want to learn how to cook and eat at home. Instead of going for weekends away, tell your buddies that you need to spend quality time with your partner and family, and then use this time to look for work.

Another common mistake is to simply put everything on credit, believing that you’ll pay off your costs with your next job. While credit is wonderful for paying bills, it hides your actual costs. Pay for everything in cash and you’ll be forced you to keep an eye on your actual bank balance.

The secret is to keep your chin up, but your head down, and in no time, you’ll be getting to exactly where you want.