In Case of Imminent Job Cuts by Your Employer: Crucial Financial Actions to Implement Immediately
If the job axe might fall, here's what you need to know:
First things first, it's time to take charge of your finances. Stoy Hall, CEO of Black Mammoth, advises stopping the panic and starting to prepare. Create a "worst-case-scenario" budget posthaste. Slash all non-essential items. You'll feel more secure knowing how minimally you can live, and clarity conquers fear.
Know your limits. Calculate your financial runway by adding up your available cash, savings, and benefits, then divide by your core monthly expenses. If you've only got enough cash for two or three months, it's crunch time. Seek out side gigs or temp work now to beef up your buffers before you need 'em. U.S. employers are cutting roughly 696,000 jobs through May 2025, with layoffs up by a whopping 80% compared to last year. Yikes!
Don't push off reviewing benefits or health insurance options until it's too late. Gather crucial documents like your last pay stub, severance package, and COBRA or health insurance alternatives as soon as you can. Delaying means you could lose access to critical information and systems.
After you evaluate your financial situation, Danika Waddell, founder of Xena Financial Planning, recommends ensuring you're aware of your health insurance timeline and understanding the specifics of your separation agreement. Better yet, get a pro involved if needed. An attorney can help you review and sign the separation agreement quickly. Plus, remember that COBRA isn't retroactive, and waiting might leave you with a coverage gap. Ugh.
Lastly, if you're concerned about job security, hold off on aggressive debt payoff and channel that money into your emergency fund instead. Cash reigns supreme in uncertain times. If you're looking to reduce taxes, consider converting part of a traditional Individual Retirement Account to a Roth. Just steer clear of withdrawing from your 401(k) unless it's necessary.
Facing a layoff can be tough, but taking action now empowers you to navigate the storm. Create a lean budget, calculate your runway, secure your benefits, and maintain a fighting spirit. Losing a job doesn't denote failure; it's simply a pivot point. By beginning to prepare today, you'll be armed and ready to take your next step with confidence.
So, brace yourself, soldier. Keep your finances in check, stay on top of benefits, and remember that every setback is a setup for an even bigger comeback. Good luck!
Tips for your wallet:
- Assess your financial runway. Determine how long you can survive without a paycheck by calculating your available resources and subtracting core monthly expenses.
- Focus on building or beefing up your emergency fund. Aim for three to six months of living expenses in an easily accessible savings account.
- Monitor your spending. Keep tabs on every expense to identify non-essential line items to eliminate.
- Secure important financial and employment documents. Gather critical paperwork like your last pay stub, severance package, and health insurance options to prevent losing access to vital information.
- Network and refresh your professional profile. Maintain a strong professional network and update your resume and LinkedIn profile so you're job-search ready.
- Consider preserving retirement accounts. Resist the urge to cash out retirement accounts and redirect retired savings to your emergency fund for extra liquidity.
- Explore additional income sources. Look for side gigs or temporary work to bolster your income in the event of a layoff.
Stay informed, soldier! Make the most of the resources at your disposal and keep moving forward.
- In order to ascertain your financial stability during a layoff, calculate your 'financial runway' by summing your available cash, savings, and benefits, then subtracting your core monthly expenses.
- Instead of aggressively paying off debt, focus on building or beefing up your 'emergency fund' to cover three to six months of living expenses in an easily accessible savings account.
- Monitor your 'personal-finance' by keeping tabs on every expense to identify non-essential items to eliminate from your budget.
- Secure 'education-and-self-development' materials and documents, such as your last pay stub, severance package, and health insurance options, to prevent losing access to vital information.
- Bolster your 'career-development' by networking, updating your resume and LinkedIn profile, and looking for side gigs or temporary work to expand your 'job-search' opportunities.
By following these tips, you can navigate a layoff with confidence and ensure your finances remain secure during uncertain times. Good luck!
