Georgians aren’t financially prepared in the event of a job loss.
According to the Mid-Year 2015 Consumer Survey conducted by the Georgia Credit Union Affiliates, 38 percent of respondents have been unexpectedly laid off or terminated at some point in their careers. Despite this statistic, Georgians still aren’t saving sufficient funds in case it happens to them.
Thirty-one percent of respondents said if they lost their jobs they would not be able to cover essential expenses for even a month, while 57 percent said they have less than enough saved to cover three months’ expenses. Twelve percent said they could live for 3-6 months in the event of a job loss, while only 9 percent of respondents said they could cover expenses for 6-12 months.
According to the U.S. Bureau of Labor Statistics, there are 8.3 million unemployed workers in the U.S. The national unemployment rate is 5.3 percent, while in Georgia the current unemployment rate is 6 percent. More than 2 million Americans have been jobless for more than six months.
“In order to prepare for an unforeseen event such as losing a job, consumers should consider putting away at least 10 percent of their net income into a savings account via direct debit from payroll,” said Platinum Federal Credit Union CEO Kabir Laiwalla. “It can also be a money market account or an e-savings account, but it’s best to not have access to the account so you aren’t tempted to use the funds on luxuries.”
Laiwalla said although for years it was recommended to have 3-6 months of savings in an emergency account, it is now recommended to have at least 6-9 months.
“If you can push it to 12 months, that’s even better. If you have an account with a local credit union, you may want to call them and inform them about the situation,” said Laiwalla. “Many offer skip-a-pay options where you can skip a month or two of payments on your loans. You can also talk to the member service representative and they should be able to help you determine the various options, including lower-rate credit cards so you aren’t paying 24-28 percent to big-bank credit cards. Most credit union credit cards’ interest rates are between 5.99 to 12.99 percent.”
Human Resources Specialist for Georgia Credit Union Affiliates Sherrich Thegg says it’s important to be proactive and seek other opportunities if you feel your job may be in jeopardy.
“Start networking and seek other employment right away,” said Thegg. “Always have a current résumé ready and look into other resources such as mortgage insurance that will cover your payments until you can get back on your feet. A credit union can inform you of all the options available in terms of covering your expenses while unemployed or facing possible unemployment.”
Tips to stay financially stable in case of job loss:
- Visit your state’s Department of Labor. The Department of Labor is a good resource for obtaining new employment, unemployment benefits, unemployment insurance and health benefits.
- Consider borrowing from current investments. There may be a tax or other penalty, but when income abruptly stops, one option to consider is borrowing from a 401(k), Roth IRA or insurance policy. It can help keep your head above water until you find employment and keep you from having to take out a loan or running up the balance on high-interest credit cards.
- Consider temporary job options. If finding work is taking a while, a temporary job can help bring in some income while you’re still seeking a permanent fit.
- Check with a credit union. If you’re out of work and need advice, check with a credit union. If you aren’t already a member at a credit union, consider switching. Credit unions offer benefits such as lower interest rates on loans, payment options to help in a crisis situation like a job loss, higher savings deposit yields and fewer and lower fees compared to banks.
- To learn more about credit unions in your community and how they help people afford life, visit:http://www.asmarterchoice.org/.