The Importance of Savings: How I Lived A Year Unemployed

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Retirement savings - Everything you need to know

This past year was a whirlwind of events. Becoming unemployed was something I never imagined I would go through. The first lesson I took away from living unemployed this year, is no one (including me) is immune to hard times.

Before I lost my job, I didn’t understand why people couldn’t save or pay off debt. I do now.

Things can happen unexpectantly that you can’t control. You can, however, control your perspective and how prepared you are before they happen. Here's my story of how I survived unemployment and what I learned.

What happened when I lost my job

I was caught off guard when I lost my job. I didn't have a backup plan and had zero job prospects. And so I had no choice but to tap into my savings safety net, which would only cover three months of my living expenses. What could go wrong?

My three months of cash for living expenses went by quickly, even after spending a few weeks at my parent’s house camped out from the world. I needed more time and more money.

Cashing out my investments

I made a 911 call to my financial planner and withdrew money from a fund I had invested for short-term savings. I also got a part-time job too. This allowed me time to finish publishing the book I had been working on.

When summer came, I had a book and more direction in my career, so I quit my part-time job and started applying for full-time jobs again. I thought I would have a job by the middle of summer but that didn’t happen. Again, I needed to tap into another short-term savings fund I had been building for a new car or a wedding. Slowly, all my savings were depleted.

What I learned about my finances due to my unemployment

It still pains me to admit that just last week I had to take money out of my Roth IRA. I have lived by every finance rule and now, I've broken every finance rule.

Before I lost my job, I didn’t understand why people couldn’t save or pay off debt, but now I do. I have more compassion for people that are in a tough spot. I understand in a very real way, why living debt-free and having savings are important. Life happens to even the most prepared and financially secure, and suddenly every rule goes out the window when you need to survive. I totally get it now.    

The importance of having savings

I would not have been able to accomplish what I did if I had debt or I didn’t have savings. I’m proud of myself, that I was able to survive a year on my savings. I went on trips, I spent more time with my family, and I continued to live my life. I just ate more homemade meals and didn’t go shopping.

I’m choosing to have a positive perspective through it all. I have hard days, but I can see how others will benefit from my life experience. If people start taking debt and saving seriously after hearing my story, then all I’ve gone through was worth it.

Learn from my experience: What to do before you become unemployed

All of that being said, here are some action steps you can take if my story resonates:

  1. If you can make progress paying off your debt, DO IT. Get rid of it. Trust me, it comes in handy.  
  2. If you have a job (even a low paying one), put money aside with every pay period. You’ll be surprised at how it can add up. When you need it, you’ll be glad you have it. Calculate three to six months of essential living expenses and make that your goal.  
  3. Make regular contributions to an IRA or 401(k). I learned that because I made contributions to my Roth IRA, and it’s been open for five years, I could take out what I contributed without paying a penalty charge. 

My goal with sharing my experience is to encourage and motivate you if you are facing some similar to what I went through. Despite the hard times, remember, you will get past it.

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