Unemployment benefits, emergency savings. Here’s how to get by without a paycheck after a job loss

Amazon, Google, Microsoft and Paramount are among a long list of companies with recent layoffs. Many of those unemployed workers are now trying to figure out how to get by without a paycheck.

CNBC spoke to financial experts on the best way to use your financial resources while unemployed.

“Job loss is extremely traumatic, but it is important to remember that it is not the end of the world,” said Michele Evermore, a senior fellow at The Century Foundation.

Some newly unemployed workers are offered a severance package by their former company, which often means their paychecks are continued for some period or that they receive a lump sum at their termination. Certain benefits, such as health insurance, may also get extended.

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These funds can delay when you need to dig into your savings, said certified financial planner Cathy Curtis, founder and CEO of Curtis Financial Planning in Oakland, California.

“If the person was fortunate enough to get a severance package, they can draw on that first,” said Curtis, who is also a member of CNBC’s Financial Advisor Council.

In some states, it can take weeks for your unemployment claim to be approved, so the sooner you file, the better, Evermore explained.

“As soon as someone becomes unemployed, the next website they should visit should be the state unemployment application site,” she said.

You are typically supposed to start receiving your benefit within 21 days after you’ve applied, but Evermore said, “states are still a little slower than they were pre-pandemic, so the wait could be a little longer.”

To help you budget, determine how much you might receive and for how long, experts say. The average weekly benefit ranges greatly between states, Evermore said. Most states pay benefits for 26 weeks.

Whether or not the package affects your unemployment benefits depends on your state’s rules, Evermore said. Just be sure to accurately report the amount and timing of any severance to your unemployment agency both when you apply for the benefits and on your continued weekly claims, she said.

For example, the agency in New York says people who were ineligible for jobless benefits because of their severance package can apply for the aid once their severance runs out and if they haven’t been rehired yet.

The Employment Security Department in Washington state, meanwhile, says severance payments do not usually affect your benefits.

After a job loss, you should make sure you know your exact monthly expenses, said certified financial planner and physician Carolyn McClanahan, founder of Life Planning Partners in Jacksonville, Florida.

“If they don’t, they should immediately figure it out and what can be cut until their financial situation is stabilized,” said McClanahan, who is also a member of CNBC’s Financial Advisor Council.

Curtis added that it would be wise to do without “discretionary expenses such as dining out and travel until a new job is found.”

Hopefully you have an emergency savings fund to draw from, Curtis said. Unlike the money in, say, your retirement account, these savings are usually in a high-yield savings account or another place that’s easy to access “and very liquid,” she said.

If it takes a while to find another job, the next best place from which to pull money is any taxable, nonretirement investment accounts, Curtis said. While this might land you with a larger tax bill, you’ll avoid the penalties that come with digging into retirement savings earlier than allowed.

You may even be able to avoid taxes. If you have any securities that have had a loss, you could look to first sell those and circumvent capital gains, Curtis said.

If you don’t have securities in the red, you should try to sell assets that you’ve held for a year or longer, as these usually are taxed at more favorable rates than those you’ve owned for just months or less, she added.

“Tapping into retirement accounts should be a last resort as withdrawals can have penalties and will be taxed at higher ordinary income tax rates,” Curtis said. “Plus, it disrupts the compounding growth of retirement savings.”

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