5 Steps to Take Immediately if You’ve Lost Your Income

1. Do a Financial Review

Begin by taking stock of where you are financially. The goal is to clarify your financial obligations and see if you have enough money to get you through the short term. Consider the following:

Your Expenses

What immediate bills do you have coming up? There are the essentials—such as your housing payment, phone bill and utilities. There's also discretionary spending. This can include everything from eating out to traveling to shopping. If you've lost your job, focus on what's most important and trim nonessentials for the time being. (We'll take a deeper dive into this shortly.)

Your Debts

Debt payments are considered essential expenses: Failing to stay on top of them could negatively impact your credit score. Take this time to list out all your current debts and monthly payments. That can include credit cards, student loans, car payments and more.

Your Savings

What's the status of your emergency fund? A common rule of thumb is to have three to six months' worth of living expenses available in your savings account. If you're not there yet, take note of what funds you do have available. The purpose of an emergency fund is to help you weather financial surprises, such as unexpected job loss.

Other Income

Do you have any other income aside from what you've lost? That might include investment gains, money from a rental property or cash you have coming in from side gigs. Ballparking your earnings can help you create a new budget.

One note about investment accounts: Pulling money out of a 401(k) or traditional IRA can have serious repercussions. You'll likely face a 10% penalty if you're under age 59½—plus a tax bill. Funds in a Roth IRA or brokerage account are easier to access and much more tax-friendly.

2. Apply for Unemployment Benefits

After an unexpected job loss, you'll want to apply for unemployment benefits as soon as possible. These payments can provide financial relief until you secure a new job. Unemployment benefits vary from state to state, but you'll generally have to meet the following criteria to be eligible:

• You're unemployed through no fault of your own. Lack of available work counts (being fired doesn't).
• You meet certain work and wage requirements. Each state has its own minimum requirements. To be eligible, you must have worked for a certain amount of time or earned a minimum amount of income.
• You meet any additional requirements set by your state. You can use this search tool sponsored by the U.S. Department of Labor to review your state's requirements.

If you've checked off all these boxes, you can apply for unemployment benefits in your state. You'll provide basic information about yourself and your former employer when filing a claim. If approved, you should receive your first benefit check within two to three weeks. Benefits typically last up to 26 weeks, but some states offer more or less than that. The amount you receive will depend on your previous weekly earnings and your state's maximum benefit. Massachusetts provided up to $823 per week in 2022, for example, while Alabama offered just $275.

3. Look for Ways to Cut Expenses

After reviewing your finances and applying for unemployment benefits, you can build a new budget. Now is the time to cut your spending. Consider these tips:

• Track your spending. You can do this with a budgeting app, a spreadsheet or any other way that helps you understand your spending habits.
• Review existing memberships. What can you reasonably eliminate from your budget? Maybe there's a free trial you forgot to cancel, or a subscription you don't mind cutting.
• Reduce monthly bills. Does your utility company offer any programs to limit your electricity costs? Switching your cellphone plan or insurance carriers can also make financial sense. The same goes for carpooling or taking public transportation. If you haven't already paused your federal student loan payments, you can explore that too.
• Bring down your food costs. Meal planning, taking advantage of sales and buying in bulk can all reduce your grocery spending.
• Curb discretionary spending. An unexpected job loss doesn't mean you have to live like a hermit, but it's probably wise to dial down your discretionary spending. Perhaps you choose a weekly amount that works for your budget and leave it at that.

4. Find Extra Ways to Supplement Your Income

Think about other ways you can use your skills to bring in money quickly. That might mean freelancing in your industry or stitching together part-time gigs. Picking up a side hustle can provide some financial relief. That might mean driving for a ride-hailing service, tutoring, babysitting, dog walking or working from home. Selling stuff online can be lucrative as well.

Another option is looking into financial assistance programs or credit counseling to provide more lasting relief. If you're stuck in a debt cycle, a credit counselor can provide financial education and help you make a plan for getting debt-free.

5. Start Looking for a New Job

Think about what you want the next phase of your career to look like. If you want to stay within your industry, tap your network and put your feelers out there. Post on LinkedIn, attend networking events and let folks know that you're available to work.

If you're looking to make a career change, consider reaching out to people who are already doing the job you want. Does it require additional schooling or credentials? What's their day-to-day like, and what's the career trajectory? Working with a career coach or recruitment firm might help put you on the right path. Either way, update your resume and cover letter (and tailor them to each new job you apply for).

The Bottom Line

Income loss can be tough to navigate. What matters most is protecting your finances and credit health while you figure out your next move. That's where Experian comes in. You can check your credit report and credit score for free, anytime you like. It's a simple thing that can help you manage your credit during your job search and beyond.