This year has not been kind to a lot of people. Many of those people have had to leverage unemployment insurance in order to make ends meet. But even with expanded benefits from the various stimulus packages passed by Congress and signed into law by the President, those benefits can still leave bills unpaid and stress piling up.
There are no universal solutions to the problem of trying to survive on meager unemployment benefits. Even for those experienced with budgeting and juggling bills, there can be some strategies that are being missed. We’re going to talk about a few of the smarter ways you can use unemployment to help you get by.
1. Don’t Forget Taxes
While unemployment benefits aren’t much, they are still considered by the federal government as taxable income. This means not only do you need to report it, but you also need to pay taxes on it. There are often provisions with your state unemployment office to have estimated taxes withheld. But if not, make sure you put enough aside for the taxman. The unfortunate part is that often you can only choose to have 10% withheld, which may or may not be enough to satisfy your tax obligation.
There are also exceptions to having the estimated tax withheld. If you can have it held back and still pay your bills, then absolutely do it. But on the other hand, if you are in dire circumstances and keeping your benefits untaxed means the difference between having to get a predatory loan or being able to get by on your unemployment, then you may want to deal with the taxes later.
2. Quickly Adjust
Many people who receive unemployment benefits often fail to make the needed lifestyle changes that are needed to get by on the reduced income. This means that they are still spending money as if they were employed. This is a fast way to get underwater.
By adjusting quickly to your new budget, you can prevent any unexpected shortcomings in your spending, and make sure that you have enough for what you need. Cut out the least important spending habits, and make sure you focus on your most immediate needs.
3. Make Sure The Basics Are Covered
Firstly, make sure that you and your family have a place to live and food to eat. While evictions have a moratorium placed on them through the end of the first quarter of 2021 when it’s over, landlords will begin requiring back rent or tenants will face eviction. Depending on your state landlord-tenant laws, that back rent may also be accruing fees and interest during the moratorium.
Also, make sure that if you have vehicle payment, that you try to keep up with that. Transportation will be needed to obtain employment once that is available. It is also needed to make sure that you and your family can still run basic errands without incurring additional expenses from rideshares or other hired transportation.