How to Financially Prepare for a Long-Term Unemployment Phase

Unemployment is an uncertain phase for your career and finances with no assurance of a job in the future. People rely on their savings to somehow manage the next few months. However, a long-term unemployment phase can empty your accounts to make you dependent on a loan.

Thus, it gets essential to plan for a long-term unemployment phase to avoid a financial crisis. It may take some severe budget cuts to survive the uncertain times without depleting the available funds. Moreover, you should take a minimal amount of debt to make sure the repayment remains manageable.

Should You Take Loan During Unemployment?

Lenders don’t prefer loan applications from unemployed applicants because of their limited affordability. It is hard to trust someone without an income to repay a loan. However, there may come a time when the loan will remain the only option to manage the essential cost of living.

You should not use the savings to repay the loan since you will spend unnecessarily on the interest. A secondary income from a part-time job, internship, government benefits or other sources can make you eligible for the loan. Or, you can contact a direct lender to get loans for the unemployed with bad credit and no guarantor.

Budgeting Tips for Long-Term Unemployment

Living within the means is extremely important during the tough financial phase to avoid a crisis. The idea to maintain a budget will remain somewhat the same, increase the income and cut the expenses. Following are some tips to budget for long-term unemployment to avoid an overwhelming debt situation.

  • List the Expenses

You should start with creating a list of expenses from the spending history of your past few months. The list should include two categories – needs and wants. Also, write the other important expenses such as debt repayment and insurance.

Some people find it extremely hard to differentiate between needs and wants. Your mind will create illogical arguments to add unnecessary items to the list of essentials. Thus, you should create a list of questions to add items to the needs list and remain honest while answering them.

Budgeting Tips for Long-Term Unemployment

  • Find the Minimum Cost of Living

The list of needs and wants will help with the amount of money required to manage the monthly expenses. Here, you can total the money in the need section to find the minimum cost of living. You only need this money to survive during a time when every penny spends will have an impact on your financial condition.

Borrowers should use the minimum cost of living to find the loan amount for their requirements. You may think of making more money as a loan to use the remaining amount as a cushion. However, this strategy often results in unnecessary interest to be paid for the increase in the loan amount.

  • Sell Stuff

You can raise money to manage the expenses without a loan by de-cluttering your house. It is a common strategy for adults to make money without a source of income. Though, it is never easy to let go of the items with attached sentimental values.

You must focus on the purpose of each item in your house to find the unwanted clutter. Some of them may return a high value in the collector’s market. At the same time, others may require a few days of hard work to get a good enough price.

  • Explain the Job Gap

Your job gap may create doubt among the mind of recruiters to prefer some other candidate. A continuously working employee will provide more productivity compared to someone re-entering the industry after a long break. Thus, you must explain the long gap to avoid its negative impact on your profile.

Many organisations will not consider a job gap while assessing the profile of applicants. For them, skills are more important than constant employment in the market with very few opportunities. Moreover, the pandemic was the reason for the unemployment of millions of people around the globe without their fault.

  • Use Professional Network

You can use your professional network to find a job for yourself. It may seem like the obvious answer to your problem, but people still avoid it. However, the conversation is often awkward since their response is unknown.

They may suggest any job opening in their organisation to help you get a job interview. You should not expect a recommendation from them since your performance will have an impact on their reputation. Also, their response should not create hard feelings to affect the professional relationship.

  • Feel No Shame in Asking 

You will require help to sail through the uncertain times of unemployment that will include your professional network. People avoid financial conversations with their loved ones because of their uncomfortable nature. It is okay to feel uncomfortable, but you must initiate the conversation for your own good.

You should share your financial problems with your partner, friends, and family members. They may not provide financial support, but they may help you live within the means. Moreover, your inability to spend time with your loved ones outside the home will not hurt your relationships.

Furthermore, an honest discussion will strengthen your relationship to promote transparency. Your partner will appreciate your honest approach regardless of the uncomfortable nature of the conversation. You must remain honest with them if they initiate the conversation after noticing the change in your behaviour.

  • Retrain for the Job

You cannot continue the budgeting for a long time in the absence of an income. Apart from the expenses, you must focus on getting a job and the reason for the constant rejections. Your limited skill set may cause problems if you are trying to get a job in a competitive environment.

You should consider retraining to upgrade your skills and match the standards of top talents. Your prior experience in the industry will help the learning process to grasp the course content quickly. You can take professional lessons to get the required certifications with loans for the unemployed with bad credit.


To sum up, you must make some tough decisions to manage the finances for long-term unemployment. The focus should remain on finding a source of income to overcome the trouble. Also, you must reduce your expenses to a bare minimum to avoid a financial crisis because of overwhelming debt.


Kian Doyal is an author of content creation. She is looking forward to replying from non-profitable news and profitable industries, specializing in content marketing in 2017, from Florida University. She brings her decade of experience to her current role, where she is dedicated to educating and inspiring the world how to become better story letters. Can follow her on Twitter

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