The extra $600 unemployment benefit ends July 31. Here's how to prepare

The federal unemployment bonus, provided by the coronavirus relief bill, runs out next month.

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/ Source: TODAY
By Kerry Breen

Millions of Americans are currently collecting unemployment right now because of the economic damage caused by the coronavirus pandemic. Through the $2.2 trillion coronavirus rescue package, those getting jobless benefits received an extra $600 a week in federal funds on top of state unemployment money.

However, those benefits are set to expire July 31. And while there have been some calls to extend benefits and proposals for additional stimulus bills, so far, no official decision has been made.

For Americans who may soon see their unemployment payments plummet, there are a few key things to do to stay financially afloat during this time.

1. Make a budget — and stick to it.

Experts recommend first figuring out exactly how much money you'll be making after losing the $600 weekly federal payment. Once you've determined how much income you'll have after July 31, make a budget based on that amount.

According to NBC News senior business correspondent Stephanie Ruhle, the first step to making a budget is determining where your money is going.

"It can be easy to swipe a credit card and not think about it, especially when anxiety is at an all-time high, but you cannot make a good budget unless you know what you're even spending on," she told TODAY in late April.

Take some time to sit down with your credit card statements, receipts and other paperwork. Figure out what you can cut back on, and make sure to cancel anything you don't use, like an old subscription or other recurring fees. Identify truly necessary expenses, like rent, utility and groceries.

"For any good budget, the power is in the planning. The way to stick to the plan, is to keep track of the money in and the money out," said Ruhle. "You can track every day, every time you make a purchase, or do it once a week. ... Sticking to a plan is going to help make life easier. Even when it feels like everything is out of control, you've got a list. You can check things off. I can promise you, it feels really good when you get to the bottom."

2. Save when and where you can.

With a newly tightened budget, it can be hard to save, but building up even a small fund for emergencies can be helpful.

According to a new Bankrate.com survey of more than 1,300 Americans, more than half of those surveyed feel regret over the savings or retirement funds they had established before the pandemic, with many saying that they regretted not having saved more for emergencies.

The company's chief financial analyst, Greg McBride, said that a good way to try to save more money, even on a tight budget, is to set up a direct deposit so money is immediately removed from your paycheck and placed in a savings account.

"Give yourself a financial cushion, and think about your financial cushion like a hug — like a hug that is going to get you through this time," Ruhle told TODAY last month, adding that you don't have to save large amounts to make a difference. "If you are saving $10 or $20 every week or every month, I promise you, it adds up."

3. Ask for relief.

In some cases, you may be able to buy yourself some extra time to pay bills by calling and asking to defer an upcoming payment.

Personal finance expert Suze Orman recommended trying this during a recent TODAY appearance.

"Sometimes (calling) works, and here's the thing — what difference does it make?" Orman told Hoda Kotb and Jenna Bush Hager during the show's fourth hour. "If they're going to say no, at least you tried. So, you should call your credit card companies, your utility companies, all your insurance companies... Call every single one that you can and see if they will postpone, for 90 days, your payments."

Ruhle also pointed out that you can call your mortgage company and ask for a deferment.

Even if they don't delay your payment, you may be able to negotiate a lower interest rate or another benefit.

4. Don't forget about your taxes.

Unlike the $1,200 stimulus payments currently being sent out, unemployment money is taxable. Since taxes are not immediately withheld, unemployment recipients may be surprised when they owe a large amount in taxes, and that can upset your budget or savings plans.

To avoid this unpleasant surprise, call the appropriate office to make sure the proper taxes are withheld and claim your unemployment money as income on your W-2 when filing taxes.

According to Forbes, the best way to elect for income tax withholdings on your unemployment check is to complete form W-4V. Expect your state to keep up to 10% of your benefit amount. For more details, check your state's website, which will have more specific information.

If you can't enact withholdings, Forbes recommends saving 10% of your weekly unemployment payment in a separate account so that you can more easily pay anything you may owe.