If there’s one thing this past year has taught us, it’s that even those jobs that seemed secure pre-pandemic are no longer a guarantee of employment going forward. And – you no longer have to be at the bottom of the totem pole to find yourself out of work. If the industry you work in is shuttering or your employer is having to make difficult cuts, know you aren’t alone. Check out these strategies to help you prepare for a potential layoff.
Note: These tips are for those who want to plan ahead for a potential job loss. If you’ve already lost your job, you’ll want to check out my post on that very topic. You can find it HERE.
Strategy #1: Take a Breather
“Panic is not an effective long-term organizing strategy.” – Starhawk
Sometimes we get bad news or believe that bad news is heading our direction and our first inclination is to panic.
You’ve done it.
I’ve done it.
We’ve all done it.
…and while it might seem like the appropriate thing to do at the time, panicking doesn’t lead to long-term solutions or success.
So, the first step in this process of preparing for a potential layoff is to take a moment and just breathe. Think back through all of the hard times you’ve been through before. Have you survived them? If so, you’ll likely make it through any potential layoff that comes your direction. But it’s going to take a clear head to be able to do so.
Strategy #2: Plan Ahead
Once you are done with your panic session and have calmed your breathing, the next step is to consider the steps you can take now to be successful if the pink slip shows up.
Step 1: Revisit Your Budget
There’s nothing fun about tweaking your budget in these situations, especially if money was tight to begin with. But, if you want to be able to meet the basic needs of your family in the case of a potential layoff, it’s important that you sit down with your spouse and take a good hard look at your finances.
Consider the following:
What will our estimated family income be if the pink slip arrives?
While you may be losing a main income source, you might not be totally without income. If your spouse works or you have supplemental income coming in for one reason or another, calculate that total number so you know what you have to work with.
Note: If you have two incomes, you might consider running this exercise twice.
What is the difference between that estimated income and our total (current) expenses?
Take a look at the estimated monthly income amount you came up with and subtract your current expenses. Do you have enough to cover them? If not, determine how much you would need to compensate for each month.
How much money do we have in savings? What will we use that money for?
It’s important to know not only how much you have, but what the money will be used for. Not only does this help you avoid marital disagreements, but you’ll be less likely to splurge on a dinner out in lieu of paying the utility bill.
Ideally, your emergency savings fund will have enough money in it to cover your basic expenses for three to six months. If that’s not the case, it’s probably time to shift your financial goals to bulking up that savings account.
Is there anything we could eliminate immediately that would help us prepare for leaner times?
These items might include subscriptions to things such as Netflix, Disney+, or anything else that might come out of your account monthly. If your internet or television subscription isn’t absolutely necessary, you might want to consider cancelling it, until you have a reliable income stream or until that emergency savings is ready and waiting any potential layoff.
Is there any category of the budget that we can scale back in?
You might find that you are spending more than you need in areas such as grocery or household items. If that’s the case, make adjustments as necessary to help to offset the difference between your expenses and your income.
Another thing to consider is whether any creditors (or sometimes subscription servicers) offer payment plans that are less than what you currently have. More often than not, you’ll find a few that will be happy to make adjustments in order to keep your account in good standing.
Do your best to eliminate any extraneous spending you might have and place the money aside so that you can continue to pay your essential bills if the income is no longer there.
Step 2: Consider Your Benefits
One item many people overlook is the loss of benefits that come with a layoff. If you are at risk of losing your health insurance or another benefit that can wreak financial havoc, make sure to put a plan in place.
Depending on your situation and family status, you might consider Medicaid, your spouse’s health insurance program, COBRA, or a short-term insurance plan. While not all options are economically friendly, you can be certain that the unexpected will happen when you don’t have the coverage in place. Avoid those high medical bills by making sure you have options in the case of a layoff.
Step 3: Revamp Your Documents
Anytime you’re considering a shift in employment, it’s important to update your documents. The cover letter and resume you submitted years ago for your current position, likely needs at least a quick once over. With open positions at many companies receiving hundreds of applications each, it’s important to make sure your application will stick out among the crowd.
Check out this post to help you refresh those documents and place yourself at the top of the pile.
Eliminate the Unknowns
Whether the layoff is imminent or just a thought in the back of your head, it never hurts to plan ahead for future catastrophes. By using these questions and strategies to rework your current budgeting plan, you’ll be way ahead of the game if a potential layoff comes in your direction. Grab my Family Budget Plan Workbook to help you get on track and stay there, no matter what happens in the future.
Have you taken these steps to prepare for a potential layoff?