Losing your job can be overwhelming, but taking immediate control of your finances is crucial for maintaining stability during your job search. I’ve written before about the steps you need to take immediately after losing your job. One of those is to assess your budget—but what does that look like, exactly?
If you’ve never used a formal budget before, now is the time to start. But if you already have a budget, how should you adapt it to your current situation? Here’s how to evaluate your budget and make strategic cuts that will help extend your financial runway.
First off, calculate your new monthly cash flow
Before making any cuts, assess your current financial situation. Here’s what that looks like in actionable steps:
List all sources of emergency income (unemployment benefits, severance pay, emergency savings).
Calculate how many months of expenses you can cover with existing resources.
Review your last three months of expenses to understand your spending patterns.
Categorize expenses as essential (housing, utilities, food) vs. non-essential.
Once you’ve listed out these numbers in a handy spreadsheet, you’ll be able to map out by just how much you need to cut back your expenses.
Find where to make strategic cuts
The average monthly expenses for American households total $6,440, according to the 2023 Consumer Expenditures Survey conducted by the U.S. Bureau of Labor Statistics and released in September 2024 (the latest data available). Using this number, and taking a look at my own bank statement, let’s take a look at some sample categories where you could cut those costs immediately.
Subscription services ($50-200+ monthly savings)
Review all recurring charges and cancel non-essential subscriptions. This includes:
Streaming services (keep one, cancel the rest)
Gym memberships (switch to home workouts)
Any sort of premium app features
Entertainment and dining ($200-500+ monthly savings)
Some ideas to adjust your social and entertainment budget:
Replace restaurant meals with home cooking.
Host potluck gatherings instead of going out.
Use free entertainment options (libraries, parks, community events).
Look for happy hour specials and restaurant deals when you do go out.
Transportation ($100-300+ monthly savings)
Optimize your transportation costs:
Reduce non-essential driving to save on gas.
Consider temporarily suspending extra car insurance coverage.
Use public transportation when possible.
Combine errands to minimize trips.
Phone and internet ($50-150+ monthly savings)
Negotiate or downgrade services:
Switch to a cheaper phone plan.
Remove unnecessary add-ons.
Consider a prepaid plan.
Downgrade internet speed if possible.
Call providers to request temporary hardship rates.
Bill negotiation can work because companies have incentives to keep customers happy and retain business. It costs more for them to acquire new customers than to keep existing ones. As long as you make reasonable requests and politely threaten to take your business elsewhere, many service providers will offer discounts or perks.
Utilities ($50-200+ monthly savings)
Minimize utility costs:
Adjust thermostat settings.
Use energy-efficient lighting.
Fix any leaks.
Line-dry clothes when possible.
Shopping and personal care ($100-400+ monthly savings)
One place to start with your specific spending goals is to physically write down the things you want to buy before you buy them. Another tip is before making a purchase, especially online, add items to your cart and wait at least 24 hours before completing the transaction. This cooling-off period allows you to reassess whether you truly need or want the item.
Here are more of my tips to becoming a more conscientious spender, so that you can cut back on spending that isn’t adding true value to your life.
Insurance and financial services ($50-200+ monthly savings)
After losing your job, you’ll need to review and optimize coverage:
While you’re focusing on reducing expenses, remember that this is a temporary situation. Maintain a balance between aggressive cost-cutting and maintaining your well-being. I recommend starting with the easiest cuts first to build momentum. From there, start to track every dollar to identify additional savings opportunities. Be realistic about what cuts you can sustain long-term, and keep some small treats to maintain morale during your job search.
As you implement these budget cuts, you’ll be working on an active job search strategy to minimize the time you’ll need to operate on such a minimal budget.
Your next steps should include:
Implementing these budget cuts gradually, but systematically
Setting up job search alerts and networking activities
Tracking your progress in both areas
Remember, the goal is to stretch the funds you have now until you can secure a new gig. Be sure to read up on your rights, apply for unemployment benefits if you qualify, and check out your health insurance options. All of this can be done within the first few days of losing your job and it will make you feel better just to get started. And for an even more stringent approach, check out our guide to a minimally viable budget.
This articles is written by : Nermeen Nabil Khear Abdelmalak
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By Nermeen Nabil Khear 