by Silva Payne

Created on: September 15, 2010

Losing your job has been likened to suffering a bereavement. Along with all the emotional stress that you have to deal with, you will almost certainly experience a lack of spending money for a period of time. Knowing how to manage your finances when you are between jobs can mean the difference between staying afloat and sinking into bankruptcy.

The average inhabitant of the UK is estimated to have just a single month's salary in savings, despite the expert's advice to have around 3 month's salary tucked away according to

moneysupermarket.com. Will your savings be enough to see you through a few weeks of unemployment?

The very first thing you should do when you become unemployed is to register at your local Job Centre. If you intend to make a claim for unemployment benefits, it will only start from the day you first sign on. Leaving the task until a couple of weeks after your previous job ended could mean you lose out on money that you could otherwise have claimed.

With that task out of the way, the next thing you need to focus on is how you are going to cover the bills that come in each month. Make a list of all your outgoings, and prioritise them. At the top of your list should be your payment to keep a roof over your head, whether a mortgage or rent.

Your home is something you do not want to lose, even if you end up living there with no utilities and not a stick of furniture to your name. If you have a mortgage, your home is not your own until the final payment. Your lender can take back the keys within weeks of you defaulting on your payments.

If you do rent your home, you may want to start looking around for somewhere cheaper. This could help reduce your outgoings if you do not find work immediately. It could also open new possibilities when it comes to looking for work further afield.

If you need a vehicle, and you are making payments on it, that should be your second priority. However, if you can get around without your own vehicle, you might want to consider selling it or handing back the keys. If you live in an area with good public transport, or you are a 2 or more car family, then your own transportation is less important.

Next go through your monthly bills and set a strict budget. If you can reduce any payments, perhaps by switching off a land-line phone connection and using only cell phones, do so.

Making what's left of your money last as long as possible is your priority number 3. You will almost certainly have to change your grocery shopping habits. Make a meal plan and purchase only the items you need. Switch from brand name products to the store's own. If you don't like the taste, you will use less or none at all.

You must allow yourself enough money to keep looking for work. This is something that many people overlook in the early days of unemployment. You may need postage stamps to send off your resume, or cash to use public transport to get to and from interviews. If you are entitled to unemployment benefits this will help, but it may take some weeks before you receive a payment.

Seeing your finances dwindle is a good incentive to keep looking for another job. Just be careful with your outgoings, and your money should last until you secure new employment and receive your first pay cheque.

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