Layoffs can happen at any time, sometimes for situations beyond the control of either the employer or employee. Because of this, workers should always have a plan in place to move forward financially in the event that they lose their jobs. Financial advisors typically want people to have enough money saved to carry them for six months once the paychecks stop.
Unfortunately, however, this is not always feasible, and individuals may be in the process of saving when a layoff occurs. When people find themselves suddenly without a job and with little or no savings to fall back on, there are a few things to keep in mind. These strategies can help job seekers through a difficult situation and ensure that they get back on their feet as soon as possible. Some steps to take include:
Negotiate a severance package.
Individuals who are let go will typically receive some sort of severance package from their employers. These severance packages provide a portion of the worker’s salary to keep that person afloat between positions. The best time to negotiate a severance package is before being hired. At that point, individuals have a lot of bargaining power.
However, individuals who did not negotiate a generous package can still approach their former employers to try to obtain a better package at the time of a layoff. While it may not sound very feasible, many employers will take extenuating circumstances into account to ensure that their former employees have options.
Get some part-time work.
The main focus for someone who has been laid off should be finding new, full-time employment as quickly as possible. However, individuals can ease the financial burden of unemployment by getting part-time work. Also, part-time work keeps people occupied so that they do not become restless.
Additionally, part-time work does not always have to be in a worker’s primary industry. Often, the interim between full-time jobs can be a good time to find positions related to hobbies or passions that will keep spirits up while seeking a permanent position. Ideally, the part-time work will have a flexible schedule to allow for interviews and other parts of the job-search process.
Maintain health insurance.
After getting laid off, individuals often look for unnecessary expenses to cut as they reconfigure their budgets. Sometimes, people decide to let healthcare go because they are healthy and assume they will obtain coverage with their next position. However, accidents and health problems can occur at any time, just like a layoff.
Getting caught without insurance during a health emergency can lead to a lifetime of debt. Individuals should always keep their coverage going during periods of unemployment. Since COBRA is often expensive, people should look for other options that are more affordable.
File for unemployment.
Workers who lose their job without being at fault are eligible for unemployment benefits, provided that they worked more than a certain threshold of hours. The exact eligibility requirements vary from state to state.
The income generated by unemployment benefits does not fully replace an individual’s former salary. However, the temporary money can help workers avoid debt or continuing paying their bills while they look for something new.
Focus on networking.
Alongside looking for new employment, individuals who have lost their jobs should also focus on developing their professional networks. When individuals know that a professional connection is looking for a job, they can put that person in touch with the right people.
Job seekers should reach out to their professional contacts to let them know what happened, what they are doing now, and what they are looking to do in the future. Even if appealing to one’s network does not open any doors, it keeps important relationships going. Individuals may also want to research nearby networking events so they can build additional connections. Each new contact is a potential new job.
Keep active as much as possible.
While exercise may not seem related to finances at first, individuals should keep active while they are looking for new work. Often, people become less regimented about their work out schedules when they are laid off. As a result, their morale, as well as their physical fitness, can suffer.
By building time into their schedules to run, hike, swim, or engage in other physical activities, job seekers can keep their spirits up and build confidence. This confidence, plus the boost in energy that comes with exercise, can help land a dream job. Best of all, these activities can easily be done for free.
Streamline the budget.
Losing a job means cutting back on luxuries. For the time being, individuals need to think critically about what is a necessary expense and what can be eliminated or reduced. Importantly, those on a limited income should not stretch themselves so thin that they feel deprived, since that will just set them up for failure.
However, switching to a cheaper phone plan, getting rid of redundant streaming services, and cutting out extravagant dinners can save a lot of money from month to month. The budget should include all necessary monthly payments, although sometimes it is possible to negotiate with creditors to freeze payments for a short period or temporarily obtain a smaller minimum payment.