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We have all gone through a time when we were not working or earning money. Maybe this was a time in between two jobs or a time when we couldn’t find a desirable job, so we decided not to apply. If you have had the same experience, you can understand the struggles that you have to endure during this time. If you don’t have someone to support you financially or you have the extra burden of supporting your family during this time, you will have to tap into your reserves and deplete your financial resources quickly.
This is why it is important to establish a budget constraint when you are not working. Budgeting can be very tough if you have never had to deal with personal finances before. Typically, budgeting consists of managing your outflows or expenses and your inflows or incomes. Ideally, you would want to have inflows that exceed your outflows. However, when you are unemployed and you have no inflows, budgeting can become even more stressful.
While you can use a budget calculator and budget tools online to help you, these may not suit your personal situation. You need a budget that is relevant to your needs. Therefore, you must follow some tips to ensure your personal budget fits your needs.
How To Budget When You Are Not Working? Managing Your Expenses
It is essential to manage your expenses and ensure you bring them down to a minimum before anything else. Expenses are the main culprits in your personal budget that you need to identify and minimize for an effective budget constraint.
Look For Inexpensive Alternatives
There are a lot of inexpensive alternatives or even free alternatives to things you do. You must identify these alternatives and use them to your advantage. This doesn’t even need to be an unemployed person thing; anyone can use it. Inexpensive or free alternatives may be of worth to you during the time you are unemployed.
For example, if you have a hobby of reading books, you can either buy a book, read it once and never use it again, or you can go to your local library and read it for a minimum fee. Your library may even offer you free digital versions of the book for your Kindle, so you don’t even have to go to the library.
Identify Luxury Expenses
Budgeting involves around tinkering with your outflows to suit your inflows. During a time when you are not working, it is essential to analyze all your expenses and identify your luxury expenses. These are expenses that you don’t need, and you can live without them. Inexpensive alternatives can easily replace these options.
For example, if you like going outside to watch movies every weekend, you can simply replace it with watching movies at home on online streaming services such as Netflix or Amazon. There are many inexpensive alternatives to your luxury expenses. It is also a great way to stick to your budget constraint.
How To Budget When You Are Not Working? Eat At Home
If you like eating outside, chances are food expenses are a big part of your personal budget. For your budget constraint to be effective, it is important to decrease your food expenses. This can easily be achieved by eating at home. Eating at home is not only cheap but also healthy. Food expenses can prove to be an important part of your budget cuts.
Also, when you are not working, learning how to cook can be a healthy pastime. You can check with food shelf organizations for any free recipes. You can also find recipes on the internet for free. If you are trying to stay fit, you can also look into diet plans that complement your budget. You can easily follow plans such as keto on a budget.
Cancel Automatic Subscriptions
If you have subscribed to multiple streaming services, gym memberships or other services that have an automatic subscription system, you should cancel them right away. These subscriptions might not be material individually, but when you aggregate them, they can add up quickly. Chances are you haven’t even noticed these auto subscriptions because the amounts in your credit card bills were so low.
If you are into online streaming and you have cut the cable, and rely mainly on streaming websites, you might think this option isn’t for you. However, if you are subscribed to multiple streaming services, you can cut down to only one. You can also ask for friends or family to share their membership with you for streaming services that allow it.
Managing Your Income to Budget When You Are Not Working
Managing your income is also an important part of your budget. When you are not working, income can be tough to generate. However, you can still generate some quick cash without much effort and without requiring you to get a full-time job.
While budget cuts can be a great way to implement a personal budget, you must also consider looking for sources of income. If you can’t find a job easily, you can use other ways to earn money. For example, if you have extra stuff around your house that you don’t need, you can simply sell them online for some quick income. There are many online websites such as eBay or Craigslist, where you can make some quick bucks by selling used stuff.
While you may not make a tremendous amount of money using this method, it is still worth trying it. At the point in your life, when income is scarce, even the smallest income can provide significant relief. If you don’t have something worthwhile that you can sell online, you can do yard sales in your neighborhood and sell some small stuff.
How To Budget When You Are Not Working? Freelancing
Freelancing can be a great way to earn some extra money. Some people use freelancing platforms as a source of regular income and have replaced their full-time jobs with freelancing. Freelancing doesn’t have to be a regular job for you if you don’t want to. However, it can help you manage your personal budget during unemployment. Also, you never know if you end up becoming successful and end up becoming your own boss.
Freelancing income isn’t going to come very easy at first. You can sign up on different websites such as Fiverr and Freelancer and make a freelancer profile. However, it may take you some time to get your first order. Once you start getting some orders and establish yourself in the market, it is going to get much more comfortable.
During your time of unemployment, you should make sure that you are managing your debts properly. It is essential that you pay your current debts on time while also ensuring you don’t pile up more debt.
Don’t Overuse Credit Cards
You may find it easy to forget everything and rely on your credit cards for daily needs. However, that is very bad for your budget. Perhaps, it may not affect your current budget, but your future budget will be changed for sure. The worst thing you can do when adhering to a budget constraint is pile up more debt for your future self to pay. Debt payments can take up a significant portion of your payments. When you factor in the interest rates on credit card payments, it can really affect your budget.
The point here isn’t to not use your credit card at all. Times may be tough for you, and the only option you may have is paying through credit cards. In some situations, it may be the only solution. But you always have to think whether you can afford to pay not only for the item you are buying but the credit card charges that come along.
Take Loan From Friends
If things get too rough, you can also consider taking a loan from friends or family members. This will give you a little bit more time to manage your finances and budgets until you return on your feet. However, it is highly unlikely you might receive a considerable sum of money from your friends or family. Therefore, you shouldn’t get your hopes up.
While loans from friends or family might not come with interest payments, you will still have to pay them back sometime in the future. So, you have to think about whether you should burden yourself with debts for the future. There is also the possibility that you may not be able to repay them in the future and risk losing their trust.
Use a Budget Tracker App
Once you have established a personal budget, it is important to you stick to it. You can use one of the many budget tracker tools online or on your smartphone to help you adhere to the budget. By actively tracking your incomes and expenses, you will also get a better idea of most significant items in your budget. This can further help you tighten your budget constraint.
Budget trackers apps are simple to use. You can specify your monthly income, in case you have any, and your monthly expenses. Some budget trackers apps may also have a built-in budget calculator to help establish a personal budget.
Personal Capital is our favorite budgeting app, and our favorite wealth-management app. We recommend all of our readers try Personal Capital for free.
Budget When You Are Not Working can be rough for anyone and if you are unemployed, you should definitely consider establishing a personal budget. Budgeting is about either decreasing your outflows or increasing your inflows to meet your outflows. Therefore, you should manage your expenses and incomes properly while also ensuring you don’t pile up on a lot of debt.