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6 Steps to Take NOW to Prepare Yourself for a Furlough

What does furlough mean? How do you prepare yourself and your family for the loss of income on a furlough?

Are you about to go on a furlough, and you're wondering do you get paid on furlough, and can you collect unemployment if you get furloughed?

wooden desk with inspirational poster, text overlay "do you get paid while on furlough? Guide to furloughs"

I know several people who have either been furloughed over the last several years or are about to enter a period of furlough at their current employer.

And I can tell you that there's some good news and some bad news with your new situation.

The good news is that a furlough does not mean you are losing your job.

The bad news? It DOES mean a decrease in income, for the foreseeable future.  

We're going to look at what you should do to prepare if you can get unemployment and other details.

But first up, what does it mean to be on furlough?

What is the Difference between Being Laid Off and a Furlough?

Just so we're all on the same page – let's discuss what it means to be furloughed, and the difference between a furlough vs. layoff.

Furlough is a type of non-pay status for either employees of companies, or U.S. government employees. It's when your company/organization/the government, sends you home from work and suspends your pay. It's mandatory, and it can last as long as they'd like.

It's a way for companies or the government to save money without losing their workforce.

If you're a government employee, then there are two different types of government furloughs you could go on:

  1. Administrative Furlough: This is a planned event, where a government agency is attempting to reduce their spending to balance the books, so to speak.
  2. Shutdown Furlough: These are unplanned events, and they happen when no funds have been appropriated to pay for government agencies. Funds are appropriate through an appropriations law, and these can be held up in political debates. These generally happen at the beginning of a fiscal year, because that's when a new appropriations bill should go into effect to pay for everything.

When you're on work furlough, you're still technically employed…but without getting paid for it.

Compare this with a layoff, which means you're officially unemployed, and your relationship with the company or organization is over.

Do You Get Paid While on Furlough?

The plus side to all of this is you get mandatory time off under a furlough (yay!).

The bad part is you don't get paid for this time period. At least not from your company.

However, this normally means that you can apply for unemployment benefits and receive those.

Can You Collect Unemployment if You Get Furloughed?

Under the Pandemic Unemployment Compensation, furloughed employees can receive unemployment compensation. Not only that, but you'll actually receive $600/week more than your state's usual unemployment compensation.

Even so – unemployment benefits are likely to pay you much less than what you're used to being paid.

Also, unemployment benefits only can last for 39 weeks.

So, what about government furlough employees – can they apply for unemployment insurance?

In the past, furloughed government employees have been eligible to apply for unemployment benefits – you can apply for these benefits at your state government's website.

However, you should know that many (if not all) government furloughs pay their workers retroactively after the furlough period is over…meaning you get back pay.

You should know that in the past, when you get the back pay, those that applied and received unemployment compensation had to then pay the unemployment benefits back.

In other words, this is an okay solution in the short term if you're short on cash. In fact, during the last government shutdown, 10,454 federal employees used this strategy and applied for unemployment. But you need to know that you'll have to use any back pay to pay the state government back the money you're getting through unemployment.

FYI: In order for back pay to be issued, a bill has to be introduced (such as the federal employee retroactive Pay Fairness Act). It also needs to pass. In other words, for each government furlough, Congress decides if they will pay back pay or not.

And what about your health insurance? In past government furloughs, employees still kept their health insurance plan without having to pay for premiums during the furlough. However, you might owe the back-premiums you didn't pay once you get back to work (they'll be withheld by your employer, hopefully from any back pay you receive).

Pandemic Unemployment Assistance

Under the new stimulus bill (Coronavirus Aid, Relief and Economic Security Act, aka, “CARES Act”), there's been a lot of expansion to the typical unemployment benefits.

For starters, furloughed workers are included in unemployment benefits. That's good news!

Also, the length of benefits you can receive has been extended from the typical 26 weeks to 39 weeks, AND, there's been an additional $600/week added to the benefits you can receive.

Psst: Are you a government employee and you're looking for OPM furlough help? While the OPM is not able to provide legal assistance to their employees, they DO offer free sample letters you can send to your creditors, mortgage company, etc. to try to help with your bills while on furlough.

How to Survive a Furlough

If you've been given the heads up that a furlough is coming (or your gut tells you it is), then you can use that time to prep your finances.

For starters, you need to know what income (such as unemployment) you would be working with under furlough. Use this furlough pay estimator to help you.

You would then subtract your new pay from what you currently make so that you can see what your “gap” would be. Can you pay your bills with that gap? If not, multiply that gap amount you'd be missing each month in your cash flow by 3 to 6 (months), and then spend your time socking away that future income loss in the next few months.

Not only will this allow you to adjust your spending accordingly, but it will build up a small emergency savings for the months when you will be on furlough for real.

But what if you haven't been given any heads up, or not a significant one, anyway?

Here are some tips for how to survive a furlough:

1. Potentially Line Up Work for Furlough Days

Perhaps after calculating your new income, you found that you just cannot survive on it. In this case, you need to look for work that you can do on days when you won't be working at your normal job.

Hint: You are not supposed to do work for your employer during a furlough. If you do, then you are to be compensated. Read about your compensation rights for both “exempt” and “non-exempt” employees here.

It’s not exactly seasonal work you will be looking for (too bad you couldn't take up seasonal work in Alaska for a while!), but rather a small amount of part-time work. Perhaps you can try out another type of career you have been thinking about. Now would be the ideal time to start up a blog, provide child care for others, work at a farmer’s market stand/at a farm, etc.

Hint for Government Workers: you should know that, according to the OPM, you ARE allowed to seek other employment. However, you're still considered a federal employee, and must conduct yourself accordingly. Per their guidance document:

“…before engaging in outside employment, employees should review these regulations and then consult their agency ethics official to learn if there are any agency specific supplemental rules governing the employee.”

2. Try to Enjoy this “Gift” of Time

Chances are good that you will be working for someone for the rest of your life. This was the hardest lesson I learned when I was first laid off for the first time.

It was June 2008, and for the first month or so of being unemployed, I was quite depressed. Within three months I had found a new job. Once back in a cubicle, I lamented how I had allowed my mental state to take away from what my unemployment had really been: a short reprieve from a lifetime of work.

Take it from me that you might as well enjoy the extra time off that you have by doing things that you want to do, as well as things that you find hard to do when working five days per week.

Perhaps you can schedule a doctor’s appointment you’ve been meaning to make (you generally keep benefits during a furlough, which is partly why a furlough is different from a layoff), and then spend the afternoon putzing around a park.

Surprise your child by showing up at their sports event, picking them up from school, or just eating lunch with them. However you choose to spend your furlough, make sure you time the activity to beat the commuting crowd.

You might as well take the perks where you can get them, right?

3. Come Up with Ideas to Keep You Entertained, Cheaply

One of the perks of furloughs (if you can look at it that way) is the increase in personal time they afford.

And even though it may not feel like it – especially when your pay is much less than it usually is – in the time vs money debate, time is the more precious resource.

Instead of being tempted to spend lots of money outside of the house in a fit of boredom, come up with some house projects, crafts, or other ways to entertain yourself and use your time efficiently.

Pssst: you'll definitely want to check out my article on 37 things to do at home when you're bored and broke.

For example, one furlough day you might want to read that book you’ve been dying to start. Another furlough day you can spend beautifying your garden by weeding, watering, etc.

Why not volunteer from home during your forced time off? If you have the ability to choose your furlough days, you can choose them when there are free museum days in your nearest city.

4. Pare Down Your Fixed Expenses

Now would be a wonderful time to take a day and make four money-saving phone calls. How much can you save off of your current monthly expenses simply by asking?

The good thing about this exercise is that you will still be reaping the savings after the furlough is over.

I've also got a list of 250 Money Saving Tips – I suggest you start with a few low-hanging fruit ideas, and then go from there.

5. Stockpile for Lean Times

If you have time to prepare (my one friend was given three months’ advance notice), then it is time to take part of your budget and put it towards stocking up.

Instead of splurging or spending money on entertainment, use that money to take advantage of sales at the grocery store and freeze the food. Build up a toiletry stockpile by learning how to play the Drugstore Game.

Anything that you can do to decrease your future expenses will be well worth the effort.

6. Download the Free Layoff Empowerment Checklist

The printable checklist of action steps is organized by the deadline in which you need to complete each item (immediately, within 1-2 weeks, and within 1 month). It would be a super great idea for you to print it out and keep it in your personal/private file at work.

Just click the image to download.

checklist for unemployment and being laid off, with green and yellow header

Hey, you never know when you might be pulled into a “meeting”.

And finally, I want to share with you these 197 Emergency Financial Assistance Resources. They're broken down by nationwide resources, as well as resources specific to the top 10 major U.S. cities. You never know what kind of mortgage/rent, utilities, and other help you can get.

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Amanda L Grossman

Personal Finance Writer and CEO at Frugal Confessions, LLC
Amanda L. Grossman is a writer and Certified Financial Education Instructor, Plutus Foundation Grant Recipient, and founder of Frugal Confessions. Over the last 13 years, her money work has helped people with how to save money and how to manage money. She's been featured in the Wall Street Journal, Kiplinger, Washington Post, U.S. News & World Report, Business Insider, LifeHacker, Real Simple Magazine, Woman's World, Woman's Day, ABC 13 Houston, Keybank, and more. Read more here or on LinkedIn.

My Multiple Incomes

Tuesday 11th of June 2013

The most difficult thing to do during the lean months when you are earning less or not earning at all is the to not worry, but if you're going to look at the bright side, you know that for as long as you're qualified, you'll always find something, but you'll rarely have that kind of free time. Try to relax and have a little fun.


Monday 10th of June 2013

Putting away small amounts even in times when you aren't expecting it is a good way of building funds for that unfortunate emergency, along with the wonders of compounding.


Monday 10th of June 2013

I went through this for 3 out of the last 4 years! This no easy way to deal with it, but there was time to prepare for it. I started to increase my savings month in advance so I could depend on it when the furlough days hit. I took a 5% hit per year. Now that better times are here, I hop to get that money back, but there is no guarantee.


Monday 10th of June 2013

Thank you so much for sharing your experience, and your preparation. though I am sorry you had to go through it.