Financial moves to make after losing a job

1. File for unemployment

The first thing you should do after losing a job is file for unemployment. Each state has its own unemployment insurance benefits and eligibility requirements. If you’re not sure if you qualify for unemployment benefits or if your former employer told you that you don’t qualify, apply anyway—it’s up to the state to decide who is eligible.

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To get started on unemployment benefits, use the unemployment benefits finder and select the state you worked in. For example, if you live in New Jersey but worked in New York, you will file for unemployment in New York.
Make sure you have everything you need in order to file for unemployment. The information needed to apply will vary by state, so be sure to check your state’s requirements. You typically will need:

• Your Social Security number
• Photo ID, such as a driver’s license, state ID card, or passport
• Your bank routing and checking account numbers (if your state offers direct deposit)
• Information on your most recent employer, like their FEIN (Federal Employer Identification Number), which can be found on your W-2 forms

2. Review your company’s benefits

If you worked for your company for years, it’s easy to forget what severance options they offer, if any. Make sure to review the benefits that you are eligible for—for example, some companies will pay you for vacation or sick time you didn’t take. Check if your company offers a severance package.

It’s also important to check when your benefits expire if you received health insurance or dental insurance through your employer. This will help you determine how much time you have to find a new insurance plan.

3. Explore health insurance options

Health insurance may become a new expense once you lose your job. Your health can change in an instant, so it’s crucial that you protect yourself with insurance. If you are married, you can be added to your spouse’s health insurance as losing your job is a qualifying life event. Typically, you have 30 to 60 days to be added to your spouse’s plan, but be sure to research their policy.
Another option is enrolling in COBRA, which allows you to continue your health insurance coverage, although it is typically expensive since your employer is no longer funding it. However, you should note that COBRA is a temporary option. It typically only lasts for 18 months.

You can also browse Health Insurance Marketplace plans to see what health insurance is available to you out of pocket. The plans available will vary depending on where you live, but it’s sometimes more affordable than paying for COBRA.

4. Manage your 401(k)

Not all employers offer a 401(k), but if you were enrolled in one through your former employer, you’ll need to figure out what to do with your 401(k). If your former employer hasn’t given you a deadline to move or manage your 401(k), make sure to ask.

In some cases, you may need the move your retirement savings into an IRA, which is a type of retirement savings account. It’s also possible to leave your 401(k) with your employer so that you don’t have to move the money elsewhere, although you must have at least a $5,000 balance.
While it’s possible to simply withdraw the balance from your 401(k), this isn’t recommended. Withdrawing from your 401(k) too early will result in additional taxes.

5. Create a new budget

Staying on top of your spending will set you up for financial success. When you receive unemployment, you’re likely not making the same amount of money that you were at your last job. It’s wise to create a new budget for yourself to take control of your spending. There are dozens of budget templates that you can use in Excel to easily manage your budget. While planning your new weekly or monthly budget, it’s a great time to go through subscriptions or services that you no longer need and cancel them to save money.

Losing a job can be devastating. Allow yourself time to grieve, if necessary. When you’re feeling ready, polish up your resume and get back out there.