At the beginning of my first official week of being unemployed (I considered the previous two weeks to be paid vacation while my severance checks came in), I was still running high on positive energy but starting to feeling a little bit anxious. It has finally sunk in completely that I no longer have an income coming in. Add to that, we have started shopping for soon-to-arrive baby and it's hard to spend the money without wincing.
It was quite improbable that I would keep my high indefinitely, so it is actually a bit of a relief to worry a little bit. What has kept me going though is the knowledge that we had started to take positive steps in managing our money long before we got here.
Here are some of the things that I have personally done with my finances -
1. Building an emergency fund
Almost every financial advice article I have read in recent years talks about the importance of building up an emergency fund that is liquid, easily accessible and can cover anywhere between 3 to 12 months of living expenses (the time frame depends on the particular expert giving the advice). I chose to have 6 months worth of living expenses socked away. Obviously, your monthly expense calculations should cover essential items like rent/mortgages, utilities, groceries, cell phones, etc. and should avoid accounting for the new designer shoes that you MUST MUST have. Knowing that I have that money tucked away makes it so much easier for me to spend a little bit of money on myself from the single salary that we now have available to us.
2. Eating more home-cooked food
This one is also very popular advice from financial experts (along with kicking the Starbucks habit), and the fact that I love cooking/baking and have a spouse that loves eating made this one that much easier to implement. Eating home cooked food and carrying lunch from home to work for my spouse means that not only are we saving money we spent on getting lunch from outside, but we are also eating better. Right off that bat, I am saving close to $100. So in addition to a healthier bank balance, we now have a bonus of improving our own health. I don't cut corners on the type of food we buy, but I do make sure that I minimize or completely cut out any waste by using everything and doing so before it spoils.
3. Coupon clipping
I have to be honest - I was a coupon snob before being laid off. I loved a discount as much as the next person, but the idea of clipping coupons and then remembering to hand them over when buying stuff was just too much work for me. Well, all that has changed and am I happy about that! Last week alone, I saved over $150 by watching a movie with discount tickets on Saturday evening, getting a free entree for dinner and using coupons to subsidize some pretty big-ticket purchases for baby-to-come. It does take discipline to remember to cut out and carry the coupons with you, but with the kind of savings I am seeing, I have no doubt that this is one strategy I will continue to follow.
4. Cell-phone plan change
Now that I am no longer away at work all day, I've switched from an expensive contract-based cell phone plan to a pre-paid one. My immediate savings equal $30 a month! I didn't have that much usage to begin with, so this was an obvious area to save some cash. But it boggles me now to think that I could have been saving this much money over the past two years of my contract period.
Feel free to share your own tips with me!