Laid Off? 6 Ways to Prepare for a Job Loss
Closed-door meetings with senior management. Gloomy bosses. Rumors of “restructuring.” Big projects put on hold. The end of holiday bonuses. All those signs and more could indicate layoffs are coming to your company.
The threat of job loss can be paralyzing, but employees who fear their position may be on the chopping block would be wise to take some proactive steps before the ax falls. Dusting off your resume, beefing up your emergency fund, and cutting discretionary expenses will not only leave you in a better place if you do get a pink slip, but these moves also give you a sense of control and purpose during a period of uncertainty.
“Keeping your job is probably a function of many factors beyond your control; how well you manage if you are laid off depends on how well you have planned for one of life’s most unsettling what-ifs,” financial expert Suze Orman wrote in O, the Oprah Magazine.
Don’t think you’re at risk of a lay off? Think again. The dark days of the Great Recession may be behind us, when one-fifth of U.S. workers, or 30 million people lost their jobs to layoffs. But mass jobs cuts are a fact of corporate life, no matter what industry you’re in or how healthy the economy seems. (Just ask the hundreds of people who recently lost their jobs at Twitter and Google Fiber.)
In an uncertain world, the best you can do is pay attention to the signs that job losses might be coming and do what you can to prepare for the worst. If you fear that your job may soon be history, take these steps to keep yourself secure financially and increase your chances of finding a new job.
1. Cut your expenses
If you suspect a pink slip is in your future, start cutting your expenses now. Begin cooking more meals at home and bringing your lunch to work. Cancel gym memberships, cable subscriptions, or ongoing charitable contributions. Funnel the money you save into your emergency fund.
Two-income households can try living off one income. Not only will this help you get used to spending less, but you can also bank the second paycheck, giving you a greater financial cushion if a layoff does happen.
2. Reduce debt
Paying down debt is a financial burden at any time, but it’s doubly damaging when you’re not bringing in any income. If you have credit card debt or other high-interest debt, get aggressive about paying it off. Take some or all of the money you saved from cutting expenses and put it toward your credit card or loan payments.
You may also struggle to pay your mortgage or student loan while you’re unemployed. Look into your options for managing those payments, so you know what to do if money gets tight. You can adjust your monthly payments or apply for a forbearance on your federal student loans, for example. Some states, including Illinois, California, New York, have mortgage assistance programs for homeowners facing financial hardship. Refinancing your mortgage can help make your payments more affordable.
3. Review company benefits and policies
If you get health insurance through your employer, COBRA allows you to stay on the policy even after a layoff. You’ll have to pay the entire premium yourself, though, and you might be able to find more affordable coverage on the health insurance exchanges or private market. If you are married, you can switch to your spouse’s health plan. Start researching your options now so you can make an informed decision when the time comes.
Now is also the time to review your company handbook for any information on layoffs and severance pay. Not all companies will provide severance after a layoff, and policies may not be outlined in the handbook. But if they are, you can get an idea of how long you can expect to continue to receive paychecks after you lose your job.
4. Find a side job
You can lessen the sting of unemployment by lining up a side job before the ax falls. Taking on a few freelance clients, selling handmade items on Etsy, or driving for Uber will supplement your income and give you something positive to focus on if you do find yourself out of a full-time job. A side job will also bridge resume gaps that can cause picky hiring managers to overlook your resume. A successful side business could even be the first step to working for yourself full-time.
Before setting up shop, make sure you’ve reviewed your company’s moonlighting policy. There may be rules about what kind of work you can do or for whom, and you don’t want to risk getting fired for cause and jeopardizing your eligibility for unemployment benefits. Speaking of unemployment, side gigs and part-time work can also affect your eligibility for those benefits, so be sure to review the rules in your state if you do have to file.
5. Update your resume
An updated resume means you can hit the ground running if you find yourself jobless. If you’ve been out of the job market for a few years, your professional dossier probably needs a refresh. Update job titles and responsibilities, add any new skills you’ve learned, and outline your key accomplishments. Give your LinkedIn profile a facelift and add new examples of your work to your portfolio (the latter will be easier to do while you’re still employed and have access to your files).
6. Start networking
Many people let their networking efforts languish when they’re happily employed. But if a layoff is looming, you need to reach out to those you know and make new connections, so you can jump-start the job search process. Connect with current colleagues on LinkedIn, invite a past co-worker for a drink, get involved in a professional organization, and reach out to recruiters.
You want to start working your network now, since finding a job is easier when you’re employed. Eighty percent of HR managers prefer to hire passive, currently employed job seekers rather than someone who is unemployed, a Future Workplace and Beyond survey found, and 71% said a referral from a current employee was the best way to find candidates. Don’t hesitate to let people know you’re looking for a change. If you’re lucky, you may be able to network your way to a new job before you even hear the word “layoff” from your boss’s lips.