The government shutdown, which began Oct. 1, has left many federal employees out of work — but not necessarily out of a job.
Instead, more than 700,000 federal workers have been furloughed, meaning they’ve been put on temporary, unpaid leave due to a lack of government funding. Nearly the same number are continuing to work without pay.
But government workers aren’t the only ones at risk of being furloughed. Companies can choose to furlough their employees for various reasons, such as economic downturns, seasonal fluctuations, or budget constraints.
If you’ve recently been furloughed or are concerned you could be, it’s important to make changes to your finances so you can weather the temporary loss of pay. Here’s how to financially survive a furlough.
A furlough is a short-term, unpaid leave from work where the employer intends to bring employees back once conditions improve. That means you’re still technically employed, and usually keep your workplace benefits such as health insurance, life insurance, and disability coverage. However, this varies across employers, and you will still be required to pay your share for those benefits.
A layoff, on the other hand, ends employment (and benefits) entirely. Companies often lay off employees when they restructure or downsize due to long-term financial challenges. Following a layoff, employees may be eligible to receive severance pay, COBRA health coverage options, and unemployment benefits.
Read more: How a CD can help you prepare for — and survive — a layoff
In either case, impacted workers are left without pay. The silver lining of being furloughed, however, is that you still (likely) have a job to come back to at some point. However, it is possible for a furloughed worker to eventually get laid off if the employer deems it necessary.
It’s most common to see government employees furloughed due to gaps in the federal budget, though private sector employees can be furloughed too.
Even if you haven’t lost your job permanently, being furloughed can have devastating effects on your finances. And with no clear end in sight, an extended furlough can put you in an increasingly precarious financial situation. It’s important to act quickly so you can ride out this period of uncertainty.
Generally, furloughed workers are eligible to collect unemployment benefits. The first step is to contact your state unemployment insurance office to get more information about your eligibility. Some government workers may qualify for Unemployment Compensation for Federal Employees (UCFE), which follows the same rules as state unemployment benefits.
It can take a couple of weeks to start receiving benefits once you file a claim, so it’s important to get started as soon as possible. And once approved, you’ll need to submit ongoing unemployment claims with proof that you’re still furloughed and aren’t being paid to continue receiving benefits.
Most states pay a maximum of 26 weeks of regular benefits, though the maximum unemployment benefit varies by state law.
Next, take a look at your budget to determine how a job furlough will impact your ability to cover your essential expenses. You’ll want to trim discretionary spending as much as possible, at least temporarily, to ease some financial pressure and give yourself more of a cushion.
Now is also an appropriate time to lean on your emergency fund, which is meant to help bridge the gap in times of need. However, do your best to delay tapping those funds by cutting some of your daily expenses first, especially if you don’t know how long the furlough will last.
Read more: These are the two times you should tap your emergency fund
If you’re currently repaying debt, such as a credit card, student loan, or auto loan, reach out to let your creditors know you’ve been furloughed.
Some lenders, credit card issuers, and even utility companies offer hardship programs for borrowers who have been furloughed, laid off, or are experiencing other types of financial hardship. You may qualify for forbearance or deferment, have your monthly payment or interest rate temporarily lowered, and/or get late fees waived. This can make it easier to cover your essential living expenses without worrying about a looming debt payment.
At the very least, however, be sure to make the minimum payment due on any active debts to protect your credit.
Read more: Can’t pay your credit card bill during the government shutdown? This could help.
Even though you’ll (likely) return to work eventually, you can take on a side gig to cover your expenses in the meantime.
Keep in mind that if you’re collecting unemployment benefits, you’ll be required to report this income. Having a side job doesn’t necessarily mean that you’ll lose your benefits altogether, but it would lower your benefit amount and make you ineligible for benefits if you earn above a certain threshold.
Even so, it could be worth earning a side income to give you a bit more financial stability. Plus, it could lead to new professional opportunities that you may not have previously considered.
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