Layoffs and job loss happens, and it usually super sucks when they do. Most of the time, there are some clues that layoffs are in your company’s future. (I am writing this the week that a federal vaccine mandate was announced for US government employees and many state and medical workers. No matter which way you feel about the vaccine mandate, I can see a lot of people losing their jobs in the next few months.) So if you see an upcoming job loss in your future, start to prepare yourself and your family now.
Here are some ways to prepare for job loss:
Load Your Emergency Fund
Every financial guru says to make sure you have an emergency fund. Sometimes you want it to be 3 months’ worth of living costs, others a year or more. It all depends on how easy it would be for you to find a replacement job and what your family’s financial makeup is.
If you are preparing for a job loss, make sure your emergency fund is well loaded. Some tips to build up your cash supply:
- Slow down or temporarily, stop extra retirement or investing contributions and keep them in cash in high-interest savings accounts
- Look for ways to make extra cash now
- Part-time job or hustle: bring in money now to save and it could be extra income for when the future job loss happens (Sites like Fiverr can let you bring in side income with skills you already have)
- Sell extra stuff in your house on Facebook Marketplace or eBay
- Cut down on unnecessary spending, for now, to stock up your emergency fund
- Limit eating out or coffee trips
- Cancel expensive vacations
- Don’t buy unnecessary clothes
- Optimize Debt Payoff
- If you are close to paying off debt, do it ASAP so you have one less bill to worry about if a layoff does happen
- If you have tons of debt but have been working a debt snowball, maybe temporarily, cut back to smaller payments, so that you have cash available
Take Advantage of Health Care Benefits
Health Care Benefits can be one of the biggest losses, other than your paycheck when you lose your job.
So if you have the feeling a layoff is looming in your near future, take care of all your family medical needs now, while you still have your insurance!
- Get annual check-ups out of the way
- Need new glasses? Get them now
- Got a sore tooth? Have the dentist fix it now
- Need elective surgery like Lasik or a knee replacement? Do it
If you have access to an FSA (Flex Spending Account), use it up. Even if you have not fully contributed to it for the year, you usually have access to use it all, so do it before you lose your job.
- Like above, go to doctor’s and dentist appointments
- Get new glasses
- Stock up on first aid items like bandaids, feminine hygiene products, cold medicine
- Some plans even include massages, so check your plan
Make the best use of your health benefits now, while you still have them.
Plan for Future Medical Coverage
In addition to taking advantage of all your benefits now, begin looking at future health care options.
- Price out ACA (Affordable Care Act) Plans, and include health care coverage in your future budget.
- Many states have CHIP health care coverage for free or low cost for children, depending on your annual income, check those out.
- Can you get on your spouse’s plan?
- COBRA is often offered so that you can stay on your old company’s group plan for a few months while switching jobs but you would be responsible for both the employee and employer contributions and the costs can often be prohibitive for some people
Begin researching what your options are now so that if the time comes, you can quickly jump from one plan to the next and keep your family covered.
Apply for Credit While You Still Have an Income
It is never a good idea to build up a bunch of credit card debt, especially if you are already in a difficult money situation, but if you are worried about your upcoming job loss and do not have a sufficient emergency fund but can hopefully find a new job soon, apply for emergency credit now, while you still have a paycheck.
Look to open:
- A 0% interest credit card (usually for 6 months or a year)
- A line of credit through your bank
- A home equity loan
By applying for low-interest credit while you still have a paycheck, you are more likely to get approved. This credit will then be available in case of emergency while you look for a new job.
Please remember this credit is for emergencies only! Like you have no groceries and there are no food banks nearby, emergency. Not, I found a sweet sale on smelly candles type emergency.
As soon as you have a new job, get any credit debt you built during unemployment paid off ASAP.
Update Your Resume
This should go without saying, if you are preparing for a layoff, make sure your resume is up to date.
Begin writing down all of your previous jobs and accomplishments. Over the years, you can forget all the cool things you have done, and now is your chance to begin remembering.
Start outlining and just customize your resume for each job listing you apply for.
If the layoff is imminent, maybe begin looking for new job opportunities now.
Talk with friends or look around in your industry to see what’s out there. Better to make contact now than when a bunch of other people from your company are looking too.
Keep Living Costs Minimal
Keeping living costs minimal should hopefully be an all-the-time goal anyways but if you are expecting to be laid off, really put in the effort to bring your living expenses down.
- Do you really need cable? Or can you get away with Netflix?
- Are you paying large membership fees to gyms, clubs, or other places that are unnecessary?
- Do you have a huge monthly car payment or a mortgage that is stretching beyond what you can comfortably handle?
- Can you stockpile pantry staples to ensure you have easy meals available in case your grocery budget gets cut? A well-stocked pantry can help stretch a grocery budget for months longer than otherwise thought.
Try to look at your life and figure out where you are splurging and could cut back. (If you can continue to live without all these extras after your job change, you might get yourself closer to financial independence faster too)
Mentally Plan Out Possible Changes
One of the hardest parts of a layoff is mentally dealing with the grief and loss of your “former life.”
Too often, a job loss means months of looking for a new job, without a paycheck. Being mentally prepared ahead of time, for what might need to happen, can allow you to take necessary actions before you go deep into debt or even bankruptcy.
- Plan for how and when you might need to sell your house or car if you are still making payments
- Where could you live if you could no longer afford your home for a year?
- Will you have to pull your kids out of private schools or activities?
- Cancel memberships to clubs or organizations
Families who lead perfectly normal Upper-Middle Class lives with decent emergency funds often lose everything because they refuse to make the necessary changes until it’s too late.
Hopefully, you find a job right away and never have to take these steps but plan for the worst-case scenario. If it happens, you will already have preparations in place and be more mentally capable of accepting the situation and making the hard decisions before it’s too late.
Wrap Up
Awaiting a potential job loss is never fun, but if you can see the writing on the wall and have time to prepare, do it. You’ll save yourself, and your family, a lot of extra stress and heartache.
How to Prepare for a Job Loss
- Load Your Emergency Fund
- Slow down investment contributions
- Take on a side gig
- Cut out unnecessary expenses
- Optimize Debt Payoff
- Take Advantage of Health Care Benefits
- Go to appointments
- Get new glasses, dental work, etc
- Have elective surgery done
- Begin shopping around for Health Care Options
- Apply for Credit While You Still Have an Income
- Use for Emergencies only
- Look to open:
- A 0% interest credit card (usually for 6 months or a year)
- A line of credit through your bank
- A home equity loan
- Pay off debt ASAP
- Update Your Resume
- Start an Outline of your past jobs and accomplishments
- Customize your resume to each Job application
- Keep Living Costs Minimal
- Make sure you can easily afford house and car payments
- Don’t carry unnecessary memberships
- Mentally Plan Out Possible Changes
- Create a plan for selling your house or car
- Would kids have to change schools or cut out activities?
- Prepare your steps and make them when the time comes so you don’t wait too long
Makes me think back to all the factories closing a few years back. Good advice.