As I mentioned in the first post of this series, it is important to have a plan in place for how you'd cope if one or both income earners in the family lost their job.
In our situation, I work part-time, so here are some ideas on a plan for coping with the loss of a part-time salary or other non-primary income.
If I get laid off....
For our family, I have to admit it would be more of a blow to my ego than to our financial situation if I got laid off. Most of my income goes to 2 expenses: daycare and funding my 401k.
This will be especially true later this year when we have 2 kids in daycare. At that point, after taxes and other payroll charges, my whole monthly income will go to daycare and funding my 401k.
I'm fine with this situation for 3 reasons:
- I enjoy working and really like my job and the company I work for
- It is important to me to fund my 401k and get the company match
- I feel that daycare, at least part-time, is beneficial for my daughter
Working part-time is the best possible scenario for me. I get personal fulfillment and enjoy the accomplishments I achieve at my job, along with having plenty of quality time with other adults. Plus I get extra time at home with my daughter, more than what I'd get if I worked full time.
Should I get laid off, our first steps would be to pull our daughter out of daycare and file for unemployment benefits for me. This would compensate for much of the income we'd be losing from my job.
If your part-time or secondary income comes from a source that doesn't pay a payroll tax, you may not be eligible for unemployment benefits. In that case, you won't have the emergency cushion of unemployment pay. This is where it pays to have an emergency fund or savings of 3-6 months expenses!
Cutting back while being at home...
Not working should allow more time to help your family live frugally, doing more home cooking, cleaning (and canceling cleaning service, if you have one), baking and meal-planning.
On the other hand, there would also be more temptation to spend by being at home all day. For me, I'd need to avoid those daily trips to Target and wouldn't be able to sign my daughter up for a lot of activities and events that cost money.
I'd need to get more creative in providing a nurturing and enriching environment for her, as well as getting her interaction with other kids her age.
One of the reasons I like that my daughter is in daycare part-time is that she seems to tend be on the shy side. At daycare, she gets a lot of playtime with other kids and she also gets exposure to a group of adults outside her family.
We've been lucky at our daycare that there is very little turnover among teachers, so she has a consistent set of faces that she sees each day. She also sees other adults coming and going through the day, whether it's other parents dropping off their kids or teachers from other classrooms.
If she were at home with me full time, she wouldn't get nearly as much exposure to that variety of people. So, if I did get laid off it would be a priority to get my daughter out of the house and into a variety of social situations without spending much money.
Finding new sources of income...
Replacing the lost income may or may not be a priority, depending on how important that income was to your family expenses. Also, you may be able to balance out some or all of that lost income with savings in other areas.
I'd begin looking for another job, but I'd prefer not to work full time so my prospects may be a bit limited. Another avenue to explore is work-at-home activities that can be done around your kids' schedules.
I've read a lot about work at home jobs and the large number of scams out there, so that is something to be cautious of. One avenue worth exploring is writing for sites like ehow.com. I'd also look into virtual assistant jobs, as I have a lot of relevant experience.
It remains to be seen though how much time I'd actually have to dedicate to work while being at home with 2 kids. I would definitely need to step up my level of organization to do it all!
Conclusion
The loss of a non-primary income stream can be offset with savings in other areas. It is important to keep in mind though that less time working can translate into more time spending, so it is important to direct your new "free time" into a thrifty lifestyle.
Read the rest of this series.
Subscribe to Practicing Thrift
Posts
0 comments:
Post a Comment