How to Make the Most of Your Unemployment Benefits

No matter how much you try to cut down your costs, losing your job is still a financial letdown. If you were laid off for any reason, it is time for you to move forward with your budget.

Unemployment benefits have always been a financial benefit for many Americans who lost their jobs. However, not everyone knows how to maximize the benefits they have. There are several ways that you can take advantage of your benefits and get ready for whatever comes next. Since no one knows what the future holds, it is best to be prepared.

Losing your job can affect you in the worst way, both mentally and physically. You will probably be anxious about your financial situation. Additionally, you might need to cut down on all of the luxuries that you could afford before.

If you are currently unemployed and you want to make the most of your benefits, here are a couple of things you can do.

You Need To Get Ready to Pay Taxes

You might be lucky enough to have unemployment benefits, which is great. However, it does not mean you are exempt from taxes. Many people find that an unpleasant surprise. How you deal with taxes can vary. However, individuals can expect to put at least 10% of their unemployment benefits towards taxes. Generally, people have the option to have their taxes withheld when registering for unemployment benefits. However, people also have the opportunity to hand in a Form W-4V which is a Voluntary Withholding Request.

Prepare for Some Changes in Your Budget

If you have unemployment benefits, then you will need to spend money on essentials only–not on luxury items. You will need to try your best to make sure that your benefits last. You should consider it a priority to pay for your rent, groceries, utilities, medical bills, and other essential expenses. Make sure you do your best to delay paying off your credit card debt so you can concentrate on more important issues. It might sound strange to stay in debt, but it can help you deal with your current financial situation. Additionally, consider shopping in certain locations. We recommend that you shop in low-cost grocery stores to buy all of the necessary goods that you need.

Before you start thinking about buying what you want, you should consider what you need first. You need to live off of a needs-based budget which will help you maximize your unemployment benefits to the fullest.

Your Rent Will Haunt You in the Future

Unemployment can be a challenge to deal with. If you do not have all of the rent, then your situation could become quite uncomfortable. We recommend that you talk to your landlord as soon as possible to discuss a payment plan. With a payment plan, you may be able to pay your back-logged rent in installments, rather than a big sum all at once. In this case, the best course of action is to get your finances ready to pay for rent before it is too late.

Establishing an Emergency Fund is Important 

Whether you are working or not, you should always put money aside for the unexpected. It might surprise you that you could have some cash leftover, even while you are living off of your unemployment benefits. The best thing you can do is not spend your emergency fund. An emergency fund is important, no matter what your finances look like. It will serve as a safety net that you can use when your unemployment benefits end.

Emergency funds help you prepare for the future. When you are in a sticky situation, your emergency fund will help you out. A good rule of thumb is to have at least 3 to 6 months of expenses saved up as an emergency fund. However, something in your fund is better than nothing!

Think About Talking to Your Bank; They Can Help

Your unemployment benefits might not be enough to pay your bills. In this case, you might be able to reach a hardship agreement or payment plan with your bank or credit card company. This can help relieve your outstanding debt. Contrary to popular belief, banks can be understanding of your situation. You can negotiate your way to a payment plan.

Consider Applying for Extended Benefits

Unemployment benefits are temporary, but it’s not the end of the line. You can ask for an extension on your benefits. Most states allow you to get an extension of 26 weeks. On the other hand, some states offer an extra 12 weeks. It just depends on the specific state! These aspects only apply if:

  • Your regular unemployment benefits expire
  • You’re still jobless and actively searching for a job
  • The state you are living in is facing high unemployment rates

This depends on the state you are currently living in and your financial situation. Extending your unemployment benefits means that you will get more money and it could motivate you while you are looking for work.

However, you should know that extensions exist for special circumstances that require extra benefits. If these special cases apply to you, then it doesn’t hurt to apply. Perhaps these extended unemployment benefits will give you the support you need to live a better life.

How Can You Apply for Unemployment Benefits?

According to the Department of Labor, unemployment benefits are offered to “eligible workers who become unemployed through no fault of their own and meet certain other eligibility requirements.” If a person wants to receive unemployment benefits, then they will need to file a claim with their state’s unemployment insurance program. Individuals can file a claim in person, on the phone, or online. If you want to apply for unemployment benefits, then these are the steps you need to take:

  • File your unemployment claim with the state that you were employed in. You might have worked in a different state than the one you are currently living in or lived in several states. If this applies to you, then the state unemployment insurance agency of the state that you are living in can offer information on how to file your unemployment claim in other states.
  • When you are filing a claim for unemployment benefits, the unemployment insurance agency will request for personal information. This could include addresses and dates of your previous job. To avoid delays, present all of your personal information accurately and honestly.

It takes up to two to three weeks to get your first unemployment benefit check after you file your unemployment claim.

Bottom Line

Take full advantage of your unemployment benefits as much as you can. You should establish an emergency fund and focus on buying necessities only. In addition, consider discussing with your landlord and your bank to find a suitable payment plan that fits your financial situation. You can also apply for extended benefits, which is more money received after your regular unemployment benefits expire. Some states offer more than 20 weeks, while other states offer extended benefits for less than 13 weeks.

To maximize your unemployment benefits, you need to do your best to remind yourself of how helpful these benefits can be. These might be hard times, but you are not alone. This is only a temporary phase that you need to focus on to improve your quality of life.