Between the federal government slashing entire departments and many industries cutting back to deal with economic uncertainty, layoffs are hitting all time highs. With that backdrop, it makes sense for everyone to consider how to survive a layoff — even if your job currently seems secure.
These time-tested strategies can help if you’ve already been laid off, have been notified that layoffs are coming, or just want to be prepared.
Apply for unemployment
The moment you lose your job, you should apply for unemployment insurance. Unemployment insurance is a federal program that’s administered on a state level. That means you’ll need to apply with your state’s unemployment office. (You can find your state agency here.)
Both benefits and eligibility requirements vary from state to state. However, what’s almost always true is the process of getting your first payments can be slow, particularly when layoffs are soaring. That’s why applying immediately is worthwhile. The sooner you apply, the quicker you get a check.
But understand that these checks are not going to come close to replacing your working income. Normally, benefits amount to somewhere between 10% and 60% of your working wages, depending on how much you earned and where you live. In California, for example, the maximum weekly benefit is $450 — so, roughly $1,800 a month.
Cut costs
If you’ve been laid off — or even threatened with a layoff — now is the time to go through your monthly expenses to find places where you can whittle back your costs.
Start by re-shopping some of your regular expenses, starting with your property insurance (home and auto), cable and telephone plans. All of these companies know that once you’re a customer, you’re likely to stay a customer simply because shopping is a pain. Thus, they often raise rates on existing customers every year. That means you’re often paying more than necessary out of inertia.
But if you shop for new property insurance and telecommunications/internet/cable subscriptions every two or three years, you’re likely to save a bundle — often $200 or more annually.
After that look for subscriptions and streaming services that you don’t use. And consider cutting back on other discretionary expenditures, such as expensive gym memberships, dinners out and vacations. You can still do these things, by the way, but you might want to do them a little more cheaply.
Your $200 monthly Equinox membership can be replaced with a $20 a month membership to a cheaper gym, for example. To be sure, you might need to bring your own shampoo. But the $180 monthly savings just might help you make the rent on a reduced income. Likewise, if you normally spend $500 a month going out to nice dinners, cutting that in half makes a big difference. And, the change is temporary — only until you get a new job.
Troll for health coverage
If you had health coverage through work, you’re likely to be offered COBRA coverage after a layoff. Don’t assume that’s your best choice.
If you can piggyback on a spouse’s company-sponsored health plan, that’s usually the cheapest alternative.
If not, check out your state’s insurance exchange to see if you can find more affordable coverage. Particularly if you’re young, the insurance exchange rates are likely to be far less costly than your former employers COBRA offering.
Find a side gig
The key to surviving a layoff is to tap your savings as little as possible to make your money last as long as possible. So generating another source of income can be pivotally important. It simply helps close the gap between what you spend and your reduced income from unemployment insurance.
Side gigs also have the ancillary benefit of helping you remain engaged in the working world while you’re still looking for full-time employment. If you want to seek employment in your existing profession, consider looking for a side gig by searching SideHusl.com by industry group.
If you’re not sure what you want to do, take the SideHusl.com quiz, which helps you find an appropriate side gig based on your interests, skills and resources.
Build taxable savings
If you haven’t yet lost your job, but want to be prepared just in case you do, start building a taxable savings and investment account.
Notably, personal finance advisors normally encourage their clients to build tax-free savings to the maximum extent possible. This saves on income taxes when you’re earning a lot of money. However, this money generally can’t be tapped prior to retirement without penalty.
So if you’re worried about job security, you should also have savings in a taxable account. This can be a savings account at a bank or a simple taxable brokerage account at, say, Vanguard or Fidelity. To be sure, you’ll pay tax on the interest or dividends that accumulate in this account each year. But that’s usually a small price to pay for the flexibility.
And, with a volatile labor market, savings you can tap at any moment can be a lifesaver.
