In 2010, I was laid off so I thought it might be helpful to create an example of how a household could adjust to a decrease in income. Please note the following:
This example assumes unemployment insurance payments amount to 50% ($1,500/month) of the previous income ($3,000/month). These numbers probably don't reflect your respective income, however, the goal is to understand a concept.
Some budget categories were purposely excluded to save space. However, in a crisis situation, taking care of your necessities is still key.
The percentage of income contributed to each expense category (pre- and post-layoff) is the same except for grocery, student loans, and the credit card payment. For example, because the mortgage is $1,100 and income is $3,000/month, that's 36.67% of net income.
Mortgages that are federally backed qualify for relief which explains the half payment. In reality, you might be able to suspend or reduce payments for up to 12 months.
Federally backed student loans are deferred until Sept. 30, 2020 so $250/month was reallocated to grocery.
$25 for the credit card bill was also reallocated to grocery. Keeping food on the table is crucial.
Some people may receive an additional $600/week ($2,400/month) in unemployment compensation. This is how the total unemployment income could reach $3,900/month. Due to the higher than normal unemployment benefit arrangement because of COVID-19, some people may be earning more while unemployed.
