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How to Budget After a Job Loss

If you’re reading this because you’ve lost your job or had a pay cut, we want to stop right here and say this: We’re so sorry. It’s scary, and we don’t make light of that. But we honestly believe that hope is greater than fear. So, that’s what you have here: hope. You can take care of yourself and your family. You can still make the best decisions possible with your money by budgeting through this situation. You will get through this.

It’s okay to admit you’re afraid. Then, stand up against that fear with these practical budgeting steps:

Focus on Your Four Walls

If you already budget, it’s time to trim the fat—aka get to the real meat of your budgeting priorities. If you don’t budget yet, this is where you start.

Focus on covering your Four Walls first: food, utilities, shelter and transportation. In other words, you feed your family, keep the lights on, pay the rent or mortgage, and put enough gas in the car to get to the very few places you need to go these days. Those are your budgeting priorities now.

Pause Your Extra Debt Payments

If you’ve got debt and have been paying it off like crazy, you need to pause the extra payments for now. Pay only the minimum payments. You’ll get back to crushing debt in time, but right now, you need to cover essentials only.  

Cut Out All Unnecessary Expenses

This is where it gets hard. But a lower income means you have to lower your expenses. Cut the cable or television streaming services. Lower your cell phone bill. Get rid of subscriptions. Start meal planning so you can slash your grocery budget. Get to the bare bones of your essential expenses. Pay for those and save as much cash as you can.

Make Money While Unemployed

Whether you’re on furlough (extended leave with some benefits and the expectation of return), had a cut in hours (and pay), or lost your job completely, know there are other opportunities. You can try to find another job in your field. Or if that isn’t possible because your field just isn’t hiring right now, then it’s time to take off in new directions. Just remember to keep yourself open to the options, and keep these two things in mind:


Start budgeting with EveryDollar today!

First of all, sometimes people find a better life calling after being laid off. Before the pandemic, only 34% of U.S. workers said they felt excited about and committed to their job.1 Of course nobody wants to be laid off, no matter how miserable they are at work. That’s not how you want to start a new career path. But it’s possible for your tragedy to become an opportunity. Career expert and bestselling author Ken Coleman points out that when you find a new job to fill this financial gap, it could help you find new skills and strengths, meet new people, or open doors you never imagined.

Secondly, this isn’t forever. Do not let your pride get in the way of a paycheck right now. You are not above an honest job that will help you take care of your family—no matter what your last pay grade was or how many degrees you earned in college. Certain industries are struggling, but others are booming. Get in on the boom! Make some money. Even if it doesn’t turn out to be your new dream job, it can give you the financial security to rest well at night.

Use Your Emergency Fund as a Last Resort

Don’t freak out if you have to use your emergency fund. That’s what it’s there for! You worked hard to save up this protection. Let it protect you. Just make sure you’ve done those other steps first. Cut out all extras and find extra work. Don’t jump straight to the emergency fund.


We say you should ask three important questions before you use your emergency fund:

Is it unexpected?Is it absolutely necessary?Is it urgent?

Obviously, the extreme of this pandemic was unexpected. Covering your Four Walls is urgent. And if you’ve done the other steps we’ve shown here and are still struggling financially, then it’s necessary.

Make sure you budget whatever you take from your emergency fund as income. Why? That’s what you’re replacing right now. Job loss, pay cuts, emergency fund use—none of these things are an excuse to stop budgeting. They’re actually all the more reason to budget! If you aren’t taking out as little from the emergency fund as you can, and treating it like income in your budget, you’re going to blow through all your savings and never even see it coming.

Realize This Is Temporary

Losing your income is stressful. Don’t let the question “How the heck do I budget?” stress you out even more. Download EveryDollar. It’s the budgeting tool that helps you make the best choices you can with your money—even now. And it’s free to use on desktop or as an app on your phone.

And, yes—this is tough. But it’s also temporary. And you know what else? You. Are. Tougher. You will make it through this, and you will be stronger when it’s over. Keep telling yourself that—because it’s true. You can do this. You will do this.

Ramsey Solutions

About the author

Ramsey Solutions

Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since 1992. Millions of people have used our financial advice through 22 books (including 12 national bestsellers) published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners. Learn More.

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