Being unemployed creates financial challenges. After all, you may be receiving little-to-nothing as income, depending on whether you qualify for unemployment benefits.
A few factors can impact the total cost of being unemployed, including how long it takes to secure a job and the kinds of expenses you have to manage as part of your job search. Additionally, using savings or investments to cover any shortfalls has ramifications beyond your shrinking balances.
If you are wondering how much being unemployed costs, here’s what you need to know.
The Time Factor
The biggest impact on how much being unemployed costs is time. It’s smart to assume that, for every $10,000 you are looking to earn in your new role, that it will add a month to your search.
For example, if you are seeking a position that pays $50,000, it might take around five months to land a job. However, there are other variables that impact this timeline, including whether your skills are considered in-demand, if there is a labor shortage in your field, and whether you are limiting your search based on certain preferences, like commute times.
Impact to Financial Stability
While you are searching for a new job, your income may be limited or nonexistent, depending on whether you are receiving unemployment benefits. This means you will likely need to handle your financial obligations with savings, funds from investments, or even with credit.
When you withdraw from savings, you aren’t just spending that money; you are missing out on any interest that would have otherwise accrued, as well. The same goes for investments. If you pull money out of a brokerage account, you lose any additional earning potential. Additionally, this may increase your income for the current tax year.
If you withdraw funds from a retirement account, you may also be subject to additional penalties, such as if you make early withdrawals, that can cost you even more. It can also harm your financial future, as you won’t have as much available when you do officially retire.
Job Search Costs
Conducting a job search isn’t free from expenses, either. For example, you may need to invest in an interview outfit, depending on whether you have something suitable already.
Additionally, costs like driving or using public transportation for interviews are factors, as well as printing resumes, providing copies of your portfolio, and other materials you may need to give the hiring manager.
How to Manage the Cost of Unemployment
If you become unemployed, you do have options to help keep your financial life afloat while you seek the right opportunity. First, apply for unemployment benefits, regardless of how you ended up unemployed. Not everyone qualifies, but it is always smart to check.
Second, review the fine print on any debt statements to see if you purchased insurance against unemployment, even if you don’t believe you have. If you have this form of protection, you may be able to get some relief from your payments for the short-term.
Finally, you can work with a reputable staffing agency to find short- or long-term opportunities that can help you take the next step in your career. Short-term positions are ideal for covering the income gap created by unemployment, and you can also find excellent long-term and permanent jobs through a recruitment agency.
If you are seeking new jobs, the professionals at The Advance Group can connect you with some of the area’s leading employers. Contact us to discuss your goals today and see how our services can help you find your ideal position.