Preparing for a Job Loss


A Reader Writes:
There is a lot of gossip about lay offs at my company. I’ve seen cuts in our budget and a lot of focus has been on finding ways to reduce expenses in recent weeks. HR and management have been working behind closed doors around the clock. I’ve tried asking my supervisor about the rumors, but she won’t answer my questions directly – although she did strongly infer that I may want to “start looking.” I’m really worried! I have a daughter in college, a mortgage, and a car payment. The thought of losing my job is terrifying. The writing is clearly on the wall and I feel like I need to do something. Searching for a new job will be stressful enough, but what more can I do to prepare for this next chapter?


The best preparation for tomorrow is doing your best today.  – H. Jackson Brown, Jr


The prospect of losing a job is definitely a scary one.  For many of us, our livelihood depends on one primary source of income.  If taken away, it can be devastating for many.  You could be fortunate and find a fantastic new role in a few weeks.  However, you should make financial plans based on the worst case scenario. Therefore, the best thing for you to do now is a bit of financial preparation in anticipation of a job loss.  This includes knowing how many months you can reasonably afford to live at your current level of expenses. Here are some simple steps that you can do now to help you feel more in control of your financial situation.

Managing monthly expenses

Now is the time to get a clear picture of your monthly debt obligations. You mentioned your daughter’s college tuition, a mortgage, and car payment.  Are there other debts you are incurring?  What are the interest rates you are currently paying? Can you pay down some of your debt right away? Transfer to another, lower rate credit card? Should you refinance your mortgage or home equity loan?  Your mortgage holder may also be willing to accept “interest only” payments during a period of unemployment. Now would be the time to understand available options, not after your employment ends.

Prepare a monthly budget and stick to it

Think about what you can you trim in your monthly budget. One client shared that he eliminated going to Starbucks and saved over $3,000 in one year.  Perhaps you can bring your lunch to work instead of buying it everyday. You are the only one who can decide what you can and cannot live without, but these are two simple examples of where you could start. Really consider where you can make those small cuts now so you will begin to see more money in your pocket.

In practice, be more aware as you pull out your wallet for every day purchases and decide if you really need to buy that item. You may want to consider getting an expense tracker to log your spending habits.  Remember, now is not the time for a shopping spree to cheer yourself up. Instead, make an effort to be more aware of where your money goes each day.

Benefits and Health Insurance

Take the time now to confirm what benefits you are currently enrolled in. If you have health insurance, be sure to get any physicals or medical tests now to make use of this benefit. Take advantage of any dental or vision coverage you may have and get those eyeglasses or contact lenses updated now or schedule a visit for a check-up at the dentist. Co-pays are a whole lot cheaper than paying full-price later if needed.

Unemployment Compensation

There is a good chance that you would be eligible for unemployment compensation even if you receive severance benefits.  You should check with your state to find out the rules of eligibility.  Remember, this is a benefit that you have already paid into while receiving a paycheck.  Therefore, you should not hesitate to take advantage of it.  It will be less income than what you are currently earning, but it will help with your expenses.

Being aware of the situation, planning and taking action makes you feel more in control of your situation. Unfortunately, you can’t do anything about being laid-off and in most cases, (unless you committed gross misconduct on the job) it is not your fault. It is a business decision that will probably wind up changing your life for the better. If you are laid off, look at it as a new opportunity. Your positive attitude will help you find a new role sooner rather than later.

– Wishing you continued success!

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