As more and more company layoffs are announced, employees across industries are worrying about their financial well-being. Will their company be the next to surprise its workforce with a round of cuts? How will they take care of themselves and their family if they no longer have an income? How long will it take them to find a new job?
While you can never totally predict the future, there are steps you can take to help prepare for it. If you’re worried about potential layoffs at your company or in your industry, or you’ve been laid off from your job already, consider the following advice from the financial experts of Kiplinger Advisor Collective.
Here, they discuss the steps you can take to help prepare your household for a layoff, get back on your feet after a layoff and ease your financial fears during an uncertain time.
Cut discretionary spending and save
“At the very least, an employee in danger of being laid off should strive to have at least a few months' to a year's worth of savings that will allow basic sustenance for that period while the alternative is being figured out. Cut out all discretionary spending and fill up that savings fund. One needs to be pretty focused to make this happen, as spending temptations abound.” — Zain Jaffer, Zain Ventures
Try to live on half your income
“I worked for many years in film and television production. My father helped me get my first job. However, he had an ironclad rule I had to agree to before he would help me get a job. I had to agree to live on a budget of half my income. In the film industry, a hiatus, canceled projects and layoffs are a standard way of life. Be prepared for extended periods with smaller incomes. Save and invest extra.” — Deborah W. Ellis, Ellis Wealth Planning
Build up a savings buffer
“Building an emergency fund is a crucial step for those worried about layoffs or those who have been laid off. Aim to save at least three to six months' worth of living expenses. This financial buffer offers you peace of mind and stability during uncertain times, allowing you to focus on the job search or career transition without the pressure of financial strain.” — Stephen Nalley, Black Briar Advisors
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Diversify your income sources
“I've learned there is no such thing as job security; there is only financial security that can be supported by having multiple streams of income. We cannot rely solely on one income source, like a paycheck. If you're laid off, look at side hustles for income until you land another primary paycheck. Whether laid off or employed, focus on multiplying and diversifying your income sources.” — Jason Vitug, Phroogal
Store your savings in a high-yield savings account
“Build an emergency fund with three to six months of living expenses set aside so you have peace of mind that you can pay your bills and send your kids to sports practice in the event you lose your job. A high-yield savings account is a great place to stash this cash since you can earn over 5% interest these days and your money will work harder for you to pad your savings faster.” — Andrea Woroch, Woroch Media Inc. / Andrea Woroch
Find a new opportunity that understands your worth
“After securing an emergency fund for the transition and processing the emotion, take advantage of the opportunity to increase your income with a new company. You can present your value to another firm that sees you through a different lens and offers compensation that reflects your worth. More income allows you to allocate more toward your life and financial goals.” — Dr. Preston D. Cherry, Concurrent Financial Planning
