Losing your job can be incredibly tough, leaving you reeling emotionally as well as creating an array of practical issues, not least how you’ll make ends meet financially.
When you lose your income stream it’s completely natural to feel stressed or anxious about your financial situation, particularly when energy, food costs and other household bills are rising, but if you have found yourself in this position, it’s important to know that there is support out there which may help you get back on track.
Here we outline some key steps to help you get to grips with your finances as well as places you can go to for guidance if you need it.
Before you get started
It’s a sad reality that redundancy is currently hitting the over 50s the hardest, according to data from the Office for National Statistics, but losing your job or being made redundant, when you are 50 or over doesn’t have to mean the end of the line if you want to keep working.
A number of our Rest Less community members have used redundancy situations to reassess what they are looking for in their working life, taking the opportunity to renew interests, start a new career or learn new skills.
It might seem impossible to remain positive, but there are other jobs and opportunities out there, even if finding them is challenging. It could be a good time to have a think about what you want out of your next role, and if you’ve received a redundancy payout from your former employer, this might buy you a bit of time to consider all the options that might be available to you.
The following tips could help you get a clear view of your finances and help you see what your next steps could be.
Understand your financial situation
Your financial situation could make a big difference to what you decide to do next, so getting to grips with exactly what’s coming in and out of your bank account can help you feel more in control.
Start by making a list of all of your monthly outgoings, with the exact amounts for things like rent or mortgage payments, debt payments, and mobile phone bills, and with an estimated amount for things like food shopping and travel costs. You may have a fixed amount coming out of your account for energy bills at present, but unfortunately, with the rising cost of energy, this will increase when your deal ends. However, it can be useful to get an overview of your monthly spending using your online banking apps to help do this for you, if it has this functionality.
Once you’ve done this, you will have an idea of how much money you are currently spending each month and you can start planning how to move forward. Our article Budgeting if your income has reduced may help you get to grips with living on a lower income.
Review your Budget
Nearly all of us could benefit from a budget review from time to time, so if looking at your finances has got you thinking that you need to cut back costs while you aren’t working, then making a budget and sticking to it can be a useful way to save money.
To start, have a look at your list and highlight a few areas you could cut back on or find cheaper options if you need to. For example, could you opt for supermarket own-brands when you go shopping or opt for a cheaper mobile phone contract? Although they may seem like small tweaks, they can often add up to much larger savings. For more money-saving tips, have a look at our articles How to save money – 17 money saving tips and Seven ways to save on your household bills.
Check if you have income protection
It can be easy to forget about protection policies you’ve taken out several years ago, but if you’ve lost your job, check whether you have any protection insurance that covers you for redundancy or loss of income.
For example, you might have an accident, sickness and unemployment policy (ASU) policy in place that may cover a portion of your income while you get back on your feet, usually for up to 12 months. Unfortunately due to Covid, many providers have stopped providing unemployment cover, but if you bought a policy prior to the pandemic, you may have cover in place.
Claim any benefits you are entitled to
If you’ve lost your job then you could be entitled to a number of benefits. While some people may find it tricky to accept that they need to claim benefits, the whole point of these benefits is to help you through the more difficult times, so if you need help, it’s essential to get the support you’re entitled to. These benefits might include:
New Style Jobseeker’s Allowance
If after losing your job or being made redundant you are looking to get back into the workplace, you may be entitled to the New Style Jobseeker’s Allowance (JSA). To be eligible for the new style JSA, you need to:
- Be under State Pension age
- Be available for work
- Not have a disability or illness that stops you from working – If you do have this, then the New Style Employment and Support Allowance might be more suitable for you
- Be living in England, Scotland or Wales
- Have the right to work in the UK
- Have been an employee and made enough National Insurance contributions over the last two to three years.
If you are eligible, depending on your age, you might be able to get up to £74.70 a week while you look for work, for up to 6 months. Getting JSA will also make sure that your National Insurance payments will continue to be made if you are under State Pension age, which means you are more likely to get the full state pension when you retire. Unlike the old style JSA, your savings and partner’s income will not affect how much you get. Read more about JSA and apply here.
Universal Credit
Even if you are eligible for the New Style JSA, you may still be able to get Universal Credit if you need help covering your day-to-day costs. Universal Credit is a means tested benefit and unlike benefits that have come before, Universal Credit is paid to a household, so if you live with your partner, their financial situation will also be taken into account when determining your eligibility. You might be able to get it at the same time as New Style JSA or New Style ESA
To be eligible for Universal Credit, you will need to:
- Be on a low income or out of work – if you have lost your job or been made redundant, you can usually start your claims process straight away
- Be 18 or over
- Be under State Pension age. If you are over State Pension age you will need to apply for Pension Credit instead, which you can read more about in our article Pension Credit Explained
- Have £16,000 or less in savings
- Live in the UK.
The amount you will get and for how long will depend on your personal circumstances. For more information on Universal Credit have a look at our article Everything you need to know about Universal Credit.
Get help with your mortgage or rent
Paying for your mortgage or rent is likely to be the largest expense you have each month, so if you think you might struggle with your monthly payments, then it’s best not to wait until you’ve defaulted or missed a payment to seek help.
As soon as you can see an issue arising with your mortgage or rent payments, it can be a good idea to:
- Get in touch with your landlord, or mortgage lender and let them know your situation – By letting them know early, you might be able to arrange an alternative payment arrangement such as spreading payments over other months once you have found work again. If you don’t let them know and get into arrears then this could start steps towards you being evicted, a scenario that no one wants to happen.
- Claim any government support you might be entitled to – If you own your home and have been claiming Job Seekers Allowance, Universal Credit or Pension Credit for over 39 weeks, you may be able to get help through the Support for Mortgage Interest scheme. Through the scheme you might be able to get a loan that pays the interest on your mortgage each month, which can help to relieve some of the pressure on you.
If you are a homeowner and are struggling to pay your mortgage, have a look at our article What to do if you can’t pay your mortgage.
See if you can claim a tax refund
If you lost your job or were made redundant part way through the tax year, you could be owed a tax refund. Tax is calculated on the estimate of your total yearly earnings, so if you ended up learning less than initially predicted, you could get some money back from HMRC.
Who pays your tax refund and when can be a little tricky to navigate, so the easiest way to check whether you might be due a tax refund is to use this tool on Gov.uk. Find out more about whether you qualify in our guide How to claim a tax refund if you lose your job.
Take control of your debts
If you have any debts that you have been repaying and your income has stopped, it’s important not to ignore them. There are a few steps you can take to stay on top of them:
- Prioritise debts over saving – if you have any rainy day savings tucked away, then now is the time to think about using them. Often the interest charged on debts is higher than any interest you might make on your savings so it’s usually best to use these savings to drive down your debt.
- Make the most of government schemes – The UK government recently launched a new scheme called ‘Breathing Space’ to give people struggling with debts legal protections from their creditors for 60 days, with most interest and penalty charges frozen, and enforcement action halted.
- Be proactive – It’s easy to want to stick your head in the sand when it comes to thinking about debt at the best of times, let alone thinking about debt when your income has stopped, but it’s best to face these things head on. If you are struggling to pay your debts then its best to contact your lender and let them know. They may be able to offer you an alternative payment plan.
- Don’t be afraid to ask for help – There are plenty of free sources of advice available and many charities and organisations can help you negotiate debt repayment plans with your creditors on your behalf. These include:
- Citizens Advice – 0800 144 8848 (England) 0800 702 2020 (Wales)
- StepChange – 0800 138 1111.
- National Debtline – 0808 808 4000
- PayPlan – 0800 280 2816
For more information on getting on top of your debts, have a look at our article How to take control of your debts.
Finally…
Losing your job or redundancy can take a real toll on your mental health, so whatever happens, don’t suffer in silence. If you are finding it hard to cope, our article Are money worries affecting your mental health? explains where to go for help if you need someone to talk to.
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