Unemployment, while being a hammering blow financially, is also one of the most stressful occurrences during the course of our lives, whether it be due to redundancy, cut-backs or personal fault. It’s up there with divorce, debt and relationships in terms of it’s impact on us, particularly emotionally, and can test even the most tolerant and balanced of individuals.
Whether it is foreseen or not, unemployment can be a time of financial uncertainty. Anxiety and stress over where the next mortgage payment will come from to how you cut back on the weekly food shop, we are forced to stop, take stock and re-evaluate every aspect of our lifestyle in order to survive.
You may be one of the lucky ones, savings to fall back on, mortgage already paid or the reassurance of a new job you have already been accepted for a couple of weeks from now, but for a huge majority, unemployment, and it’s effects deal us a huge blow, which can take months, if not years to recover from.
The first, fundamental move you must make following the news of becoming unemployed is to review your finances, prioritising them in terms of necessity. Obviously the rent/ mortgage, along with utility bills and costs of running your home are of the utmost importance, therefore your ability to maintain payments to all of these is crucial to avoid racking up arrears or fuel shut-offs. (You may think it sounds extreme but many people experience issues with power supply due to their inability to keep up with monthly repayments.) The second crucial move is to speak to your creditors, whether it be for credit cards or catalogues, and inform them of your situation at the earliest possible opportunity. Many companies have insurance schemes set up, offered to you at the time of agreement for the unlikely events that may occur. These schemes are designed to pay your monthly amounts at a time you are unable to, therefore the earlier you inform your creditor, the more likely it is that the insurance will kick in straight away, leaving you with one less debt to worry about.
How you can save money whilst unemployed is primarily dependent on the level and nature of any other income you may have still coming in on a weekly, fortnightly or monthly basis. For those who have an additional working individual who contributes within the household, the primary objective will to effectively budget and/ or downsize existing spending patterns to accomodate the drastic reduction in income. Again, creditors should be negotiated with, and general spending evaluated in order to maintain a life-style of basic existence.
There are a number of U.K Government benefit schemes in place should the worst occur and you do lose your job. The predominant, and most commonly used is Job Seekers Allowance, a benefit system which has two separate schemes, Income based and Contribution based. Your qualification for either scheme depends on your current living/ income situation. If you are married or cohabiting, your needs will be assessed in accordance with how much income your spouse is earning. The amount you receive on a fortnightly basis is assessed using the amount the Government deems appropriate for you to live on (also dependant on age) and is reduced by percentage dependant on the income coming in. The Contribution based allowance is assessed using your history of National Insurance contributions, which are a compulsory contribution towards your state pension. If your local Job Centre deems you have made enough National Insurance contributions over the course of the last two financial years, and you do not have any other income coming in, you will qualify for this second scheme.
Qualification for either of these types of benefit is dependent on your circumstances, as well as the nature of your job loss. If you were dismissed from a position, you do not qualify for the allowance for a period of six months as the Government deem the job loss to be your own fault and something which could have been prevented through appropriate conduct etc. If, alternatively, you were made redundant, and subsequently received a redundancy payment, the Department for Work and Pensions will assess the amount you received and inform you whether you qualify for additional financial assistance from the Allowance.
Your entitlement to additional benefits to cover your rent (Housing Benefit), assist in the care of your children (Child Benefit) and pay your council tax (Council Tax Benefit) are assessed by your local authority/ council, and is separate to your application for income assistance. Most, if not all of the above, require you to be in receipt of an Income related benefit, or in receipt of a low income in order to qualify for assistance. Either way, it’s important that you apply for the assistance as early as possible in order to receive entitlement from the day you became unemployed.
Jobseekers Allowance currently specifies the following amounts are the Government agreed minimums that an individual can realistically live on per week.
Contribution Based Allowance:
*Aged 16-24: £51.85 per week
*Aged 25+: £65.45 per week
For Income Based Allowance the maximum weekly rates are:
*Single Person under 25: £51.85
*Single Person Over 25: £65.45
These amounts are the maximum that will be paid per week in this category and are affected by any additional household income that your receive.
How to Save….
If you are already unemployed then chances are you are already counting the pennies, realising the necessary cut-backs and taking appropriate action to make your situation less stressful, including actively seeking new employment. Today’s economic climate proves that the latter isn’t easier done than said. According to the Office of National Statistics, the unemployment rate within the first quarter of the year hit 2.47 million (approx 8% of the U.K population). Recent reviews of these statistics, taking on board the activity of the second quarter show that the level of unemployment has dropped from 7.9 to 7.8%, around 34,000 people, giving some hope that the shortfall of employment vacancies may have ended. The statistic may show a little increase in the number of people who have found work, however those of us currently in employment-seeking category will know of the distinct lack of full-time jobs currently available.
Saving money during an uncertain financial period is a lesson in successful budgeting and economising, as well as opening our eyes to the fact that we need to change our shopping attitudes and trends. You may think this is quite obvious advice, but you’d be surprised at the number of people who don’t do this, as well as the number that perceive cheaper products to be of less decent quality. To be frank, you can’t exactly afford to be picky, or turn your nose up at cheaper alternatives to your usual spends. It’s a case of do or suffer.
I’ve written a couple of articles on the benefits of budgeting, particularly when it comes to shopping habits, and changing your habits doesn’t have to mean a huge reduction in quality. The simplest method of saving money is by changing supermarket, or spreading your shopping between several. Like it or not, the same item will always be cheaper somewhere else, and the sooner you get into the mind-set of price comparison, the sooner you’ll see the benefits. There are a wealth of comparison sites online such as MySupermarket.com which allow you to compare your usual weekly shop total with the totals at other supermarkets. This in itself will give you the best idea whether you are currently getting a decent deal at your current supermarket. It is also down to common sense. By simply visiting alternative retailers including the discount stores now popping up in towns and cities nationwide, you can easily reduce your shopping total by at least 15%.
I cannot emphasise enough the word compromise when it comes to shopping on a budget. Swapping your usual branded washing powder for supermarket branded products doesn’t mean a reduction in quality on the most part. If you do question it, then buying a very small package first will allow you to make up your own mind. Supermarket branded products can be up to 80% cheaper than higher end brands, whether it be baked beans or baby-wipes, and by altering these buys, you are saving hugely. If this method of budget shopping isn’t for you then try discount stores such as B&M and Home Bargains. The comparison in price between these and many supermarket chains is astounding!
Top Tips to Save.
1. Quit Smoking/ Drinking: whether you’re addicted or only enjoy it part-time. Smoking cigarettes costs on average £20-£40 per week, money that could be either saved for bills or used for other necessities. You’ve already mastered the basics of budgeting and unemployment can be the start of a lifestyle overhaul. If you really cannot quit, consider switching to hand-rolling tobacco with papers and filters. A 25 Gram pouch of tobacco will cost you on average £5.60 and dependant on your habit, could last you for a whole week. Combine the price with 60p for papers and £1.00 for filters and it totals £7.20. If you spend £20 or so per week on normal cigarettes then the saving is upward of 60%.
2. Sell: Anything! Whether it’s unwanted clothes, DVDS and CD’S or more valuable trinkets such as gold jewellery. Getting into the mind-set of making money will open up new avenues and keep you busy between job searches and Job Centre visits. It’s still unbelievable that many people have items of value that they don’t even realise could help them financially. Anything from broken jewellery to antiques, clothing to crockery, our homes are full of unused items taking up space and gathering dust. A period of unemployment is a great time for a new start professionally and personally, and having a clear out can do wonders to lift your mood. Use Ebay, Car Boot sales, specialists and auction rooms, research online or seek advice. Plenty of people are looking for your unwanted stuff and you’ll gain a little income from the proceeds, whether it’s £5 or £500, it all makes a difference during hard-up periods.
3. Sell your Services: If you aren’t on benefits, or even if you are, using your abilities, hobbies and knowledge to make money is another possibly lucrative way of making money. If you are in receipt of benefits, you must declare any income you receive from this type of earning as it is still classed as income. You are earning, therefore it affects your benefits/ entitlement. You won’t necessarily lose your entitlement at all, but it may be re-evaluated, especially if your little idea starts bringing in big amounts every week. The well-advised methods of additonal earning include child-minding, dog-walking and holding classes for activities, but if you put your mind to it, you could come up with more that could be better paying or even become a future business. Advertise on social networking sites and in newsagents, both are free and could get you off to a good start.
4. Make Money Online: Apart from selling, there are plenty of avenues to earn small amounts of additional income which don’t have to be declared. Taking surveys, clicking links, writing stories or reviews, blogs and how-to’s, creating websites or evaluating products. There are endless opportunities and earnings commence from around £5 upward per month depending on your commitment.
5. Don’t Borrow: Whatever you do during this unpredictable period, don’t borrow money you can’t pay back. Every penny you currently get is tied up in either maintaining your living standards (rent, food, bills) or paying off existing creditors. Adding another bill to the monthly total will only succeed in stressing you out even more. Catalogues seem to be an urge that many people succumb to and not so many can keep up with. Don’t bite off more than you can chew.
6. Switch: If your current utility bills are more than you can handle, the time may have come to evaluate and switch providers. You can do this via MoneySupermarket.com or USwitch. Ensure you are getting the lowest and cheapest deal for your circumstances before you commit to a switch. Alternatively it may be advisable to enquire with your energy providers whether a prepayment meter can be installed in your home. Ensure you get permission from your landlord if you are renting as some are funny about it. The prepayment meter will allow you to effectively budget for energy use as well as make you more conscious of how much you are using and take measures to reduce if necessary.
7. Go Green: Energy saving light bulbs can save up to 20% on your energy bills, as can becoming more environmentally aware. The more lights and appliances you switch off after use, the more energy you save. If your unemployment is set to be for a longer period of time due to illness or injury, consider growing some of your own produce such as vegetables to cut down on grocery costs.
8. Buy In Bulk: It often pays to buy in bulk, particularly with washing powder, pet food, pasta and the like. You can save up to 40% buying in this way so it’s well worth evaluating prices this way too. It can make a hell of a difference.
9. Discounts: Take advantage of any and all that are available to you, whether it be food stamps, milk tokens or online deals.
10. Maintain control: Cut-backs and budgeting are only successful if you learn and maintain the basics. Learning to adapt to this new life-style isn’t always easy but remember that it isn’t forever. It’s also a life lesson and you’ll appreciate much more the things you once took for granted.