When you don’t have a job and your savings are running low, you might find your options quite limited. Even if you are getting an unemployment check, it likely won’t be enough to fully cover your living expenses as you are searching for a position. Of course, depending on the situation, you could get funds from your family. And if you have retirement savings, you may be able to borrow from those. Neither is ideal, so it’s a good idea to explore the options.
Relying on Savings
If you have a life insurance policy you no longer need, you could consider selling it for cash. That way, you can keep paying your expenses. You can review a guide on selling your policy through a life settlement to learn the details of the process.
Looking into Retirement
Your parents might be able and willing to help in any way possible. But you might not want to accept that generosity. Think about where these funds are coming from. It’s one thing if they have quite a bit of money already and won’t miss what they give you. That way, you won’t have to worry about penalties or taxes on 401(k) savings. If you are able at some point, you can repay them once you get a job.
However, not everyone has parents who have plenty of money at hand. You don’t want them to give you money that is meant for their own retirement, especially if they are getting close to it or already there. If they start spending their assets now, they may not be able to build them back up in time. It can be difficult to keep working while in their 70s or 80s. And they might need your financial help if they drain their savings now. Make your decision based on how well off you believe they are doing now. And if you don’t want your parents living with you, it’s best to take distributions from your own assets so you can avoid becoming a burden. You can learn how to cut expenses in the interim and then prioritize retirement once you are back on your own feet.
When to Borrow from the Parents
If your parents are able to help you out, there are a few things to keep in mind. It can be tricky to mix money and family, especially if your relationship is already strained. And if you aren’t able to repay the funds on time, or there is a miscommunication about whether it is a gift or loan, you could put your relationship at risk.
Plus, your parents might feel like they have a say in how you go about job searching or spend the funds if you are relying on their money. It’s best to come up with a written contract ahead of time to show you are serious about the situation. It can also reduce conflicts or miscommunications down the road. It’s a good idea for you to pay interest to your parents, the same as if you were borrowing from another source.