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July 27, 2010

How Long Could You Stay Unemployed?

BLOG-parent-worried  Good news for job-hunters: the national unemployment level has dropped slightly as the economy continues to pull itself out of recession. However, the situation isn’t moving fast enough for many families. The news has been filled with stories of people losing unemployment benefits. This throws jobless parents who are already struggling into a bigger tailspin.

Moms are either the primary breadwinner or co-breadwinner in most families. Nowadays, most households need two working parents to cover all the bills. What would happen to your family if you lost your job? How long could you stay unemployed and still make ends meet?

Right now, nearly half of all unemployed job-seekers have been without work for 27 weeks or more (that’s over six months). Over 2 million of them just lost their unemployment benefits and won’t receive any more assistance unless Congress moves to help these families. By the end of the month, that number will shoot up to 3 million.

Parents caught in these unfortunate situations are having trouble finding work—even jobs that are part-time are scarce in many areas of the country. They’ve dipped into their savings (or used it up entirely), cashed in retirement accounts, and moved to make ends meet. I read about one hardworking father who spent 36 years employed. Now, he’s been out of work for 18 months and drained his savings to pay for health care coverage for his 13-year-old daughter who has diabetes. His older daughter is about to head off to college, but he doesn’t know how he and his wife will pay tuition.

Home life for many families has shifted to reflect our topsy-turvy economy. You see more stories often of parents forced to adjust to the challenges they face. For example, this woman had been a stay-at-home mom for 9 years, went back to teaching after her husband lost his job in 2008. He hasn’t been able to find work since. That’s a huge change that affects careers, child care, and more.

While most families can’t prepare for 18 months (or more) of unemployment, it is possible to build an emergency fund that will protect your family, pay for your rent or mortgage, and also cover what’s probably your second-highest monthly expense: child care. The secret is simple—start saving.

Experts differ on how much you should save (and the right answer is really whatever you’re most comfortable with), but the general consensus is that families should have anywhere from $1,000-5,000 stashed into a savings account. Jean Chatzky says you should have anywhere from 3-6 months of living expenses saved and set aside, just in case. The Wall Street Journal’s Complete Personal Finance Guidebook says a minimum of three months’ salary is a good starting point and even suggests keeping several hundred dollars in cash stashed in your home (keep it in a safe, not under a mattress!).

Even though we live in tough times, most experts believe many Americans haven’t saved enough for an emergency. But careful planning and preparation can help pull your family through a job-loss situation. If you don’t have an emergency savings account now, I highly recommend starting one!

If the unexpected happened and you lost your job, how long could you stay unemployed? What would you do to make sure your kids’ care arrangements stayed consistent?

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Comments

Thom

I just read the blog on how long you can stay unemployed.
I agree you should have cash you can get your hands on but
I feel the amount should be mush higher.If you have $1,000-5,000
stashed into a savings account, your out of work then you need a new roof
there goes $3,000-$5,000 right there. The problem is we have is people who
live week to week and when they do have extra money they go out to dinner or buy a new flat screen TV. They use credit cards to buy things they can not afford. Then they have to make choices on which bills to pay.
So I feel $15,000 in a savings and $500 at home would be a much better safety net

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