The First Seven Things to Cut From Your Budget If You Lose Your Job.

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Losing a job can be overwhelming, but taking immediate control of your finances is critical to maintaining stability during your job search. I’ve written before about what actions you need to take immediately after losing your job . One of them is to evaluate your budget. But what exactly does this look like?

If you’ve never used a formal budget before, now is the time to start . But if you already have a budget, how can you adapt it to the current situation? Here’s how to evaluate your budget and make strategic cuts that will help expand your financial takeoff.

First, calculate your new monthly cash flow.

Before making any cuts, evaluate your current financial situation. Here’s what it looks like in practical steps:

  • List all sources of emergency income (unemployment benefits, severance pay, emergency savings ).

  • Calculate how many months of expenses you can cover with the resources you have.

  • Review your expenses over the past three months to understand your spending pattern.

  • Divide expenses into essential (housing, utilities, food) and non-essential.

By recording these numbers in a handy spreadsheet , you can calculate how much you need to cut your expenses.

Find where to make strategic cuts

According to the 2023 Consumer Expenditure Survey conducted by the U.S. Bureau of Labor Statistics and released in September 2024 (latest data available), average monthly spending for American households is $6,440. Using this number and taking a look at my own bank statement, let’s look at some examples of categories where you could immediately reduce these expenses.

Subscription services ($50-200+ monthly savings)

Review all recurring payments and cancel non-essential subscriptions. This includes:

  • Streaming services (keep one, cancel the rest)

  • Gym membership (transition to home workouts)

  • Any premium app features

Entertainment and Dining ($200-$500 + Monthly Savings)

Some ideas for adjusting your budget for social and entertainment events:

  • Replace restaurant food with homemade food.

  • Have dinners together instead of going out.

  • Take advantage of free entertainment options (libraries, parks, community events).

  • Look for happy hour specials and restaurant deals when you go out.

Transportation ($100-300+ monthly savings)

Optimize your transport costs:

  • Cut back on non-essential trips to save on gas.

  • Consider temporarily suspending your optional car insurance.

  • Use public transport whenever possible.

  • Consolidate activities to minimize travel.

Phone and Internet ($50-$150 + monthly savings)

Negotiations or downgrading of service levels:

  • Switch to a cheaper plan.

  • Remove unnecessary add-ons.

  • Consider a prepaid plan.

  • If possible, lower your Internet speed.

  • Call your health care providers and ask for temporary hardship rates.

Negotiating accounts can work because companies have incentives to keep customers happy and retain business. It costs them more to attract new customers than to retain existing ones. As long as you make reasonable requests and politely threaten to move your business elsewhere, many service providers will offer discounts or incentives.

Utilities ($50-200+ monthly savings)

Minimize utility costs:

  • Adjust thermostat settings.

  • Use energy-efficient lighting.

  • Repair any leaks.

  • If possible, dry clothes on a line.

Shopping & Personal Care ($100-$400 + Monthly Savings)

One way to start with your specific spending goals is to physically write down the things you want to buy before you buy them. Another tip: 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 re-evaluate whether you really need the item.

Here are some more of my tips for becoming a more conscious spender and cutting down on expenses that don’t add true value to your life.

Insurance and Financial Services ($50-200+ monthly savings)

After losing your job, you will need to review and optimize your insurance coverage:

I’m looking forward to it

As you focus on cutting costs, remember that this is a temporary situation. Maintain a balance between aggressively cutting expenses and maintaining your well-being . I recommend starting with the easiest contractions first to build momentum. Then start tracking every dollar to identify additional savings opportunities. Be realistic about how much cuts you can handle in the long run, and save small treats to maintain morale during your job search.

As you make these budget cuts, you’ll work on a proactive job search strategy to minimize the time you’ll need to work on that minimal budget.

Your next steps should include:

  • Implement these budget cuts gradually but systematically.

  • Create a Weekly Budget Review Procedure

  • Setting up job search alerts and online activities

  • Track your progress in both areas

Remember, the goal is to use the funds you have until you can secure another gig. Be sure to know your rights , apply for unemployment benefits if you are eligible , and review your health insurance options . All of this can be done within the first few days of losing your job, and you’ll feel better just by getting started. And if you want an even more rigorous approach, check out our guide to a minimum viable budget .

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