How To Manage Finances When One Partner Loses Their Job

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Couple planning finances Image from http://sistergirlnews.com/2013/02/5-tips-for-couples-sharing-bank-accounts-from-the-savvy-sister-girl/

Losing a job is never easy, however when one partner loses a job while the other remains employed, different dynamics come into play that needs to be handled carefully, with teamwork and communication taking a central role to manage finances. According to a study on the health effects of jobs loss, losing a job increased the odds of poor health by more than 50 % among respondents with no prior pre-existing health conditions. It disrupts social ties and communities, couples are not spared either. Here are some precautionary steps couples can take to ensure that one partner losing a job does not harm their relationships.

  • Plan Immediately the Job is Lost

It is almost impossible to know how soon you will get a new job once you lose another, thus immediately one of you loses a job, sit down and create a plan to manage your finances. Re-evaluate your total monthly spending and map out the areas you spend most on, be as detailed as possible. You can track your expenditure over a period of time. What can you both agree on cutting down? Are there areas of your spending that you can find cheaper alternatives? Perhaps going to a cheaper gym, a lower pay TV package, explore those. In case the unemployed partner receives a severance package from their previous employer, budget for it appropriately and spread it over a long time, it is often a temptation to spend the severance package lavishly on the belief that the situation is only temporary. Never get into this temptation. Plan, plan and plan some more. 11 life hacks for people going through tough financial situations

  • Hold Regular Financial Discussions

A study byDr. Jeffrey Dew from Utah State University, found that the frequency of financial conflict increases the likelihood of divorce in marriages. Relationships are bound to be stressed from the increased financial pressure of a partner losing their job, especially if they were the breadwinner. Consequently, hold frequent money discussions about where you stand in your plan to getting back on track, state your reservations and fears about the situation you are in. At times one may feel that their spouse/partner is spending way too much, or he/she is not doing enough to look for a job but when they do, one doesn’t say a thing. If no conversations happen about those fears and irritations, the buried feelings turn into resentment which can later bubble out as passive aggressive comments that may make the situation unbearable.

 

Couple planning finances
Image from http://sistergirlnews.com/2013/02/5-tips-for-couples-sharing-bank-accounts-from-the-savvy-sister-girl/
  • Explain your situation to creditors

Whenever we have a bank loan or an insurance premium due but don’t have the means to pay it, our human instinct is to hide, run, or ignore it, sometimes to a point of even keeping our partners in the dark. However, working together as a couple to map out and make decisions about the debts and financial commitments that need to be settled urgently will go a long way in easing such a burden. Especially when the responsibility of clearing the debts will fall on one partner, the collaborative decision making will make them feel like they are not doing it alone.

Once you are aware of the existing debt, approach creditors and explain your situation, you will be surprised that a number of them would be receptive to tweaking your payment schedule or spreading your premiums over a long time to enable you to pay comfortably. Remember that it is in the interest of banks that you successfully pay off your debts rather than default. Talk to your banker, your insurance agent and work out a payment plan that is manageable as per your existing situation.

  • Include Children in the Discussion

According to a recent study, the 2017 Cost of Care Survey, a third of families spend more than 20 % of their annual household income on children, while nearly half of families spend more than 10 % on childcare. Now imagine a situation where a couple had a combined monthly income of Ksh.100, 000 and 20 % (20,000) went to child care. If one partner loses their job (with it goes half the family income), but when the employed spouse still has to fork out the Ksh.20,000  monthly, in addition to supporting their partner, it can become stressful.

Involve your children in the cost-cutting discussion (if they are old enough to understand), inform them of the reduced expenditure that will most likely affect them and that the situation will be temporary (hopefully). Otherwise, children will be confused and stressed by the sudden cut in privileges and expenses. Additionally, if you are not on the same page, conflict and resentment will easily grow when one partner starts feeling that the other is financially spoiling the children at a time when they need to be frugal.

Here are some tips on Retrenchment: What To Do When You Get Laid Off

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