5 Ways to Prepare for a Layoff

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Layoffs are stressful and can put a serious strain on your finances. Learn how to prepare for a layoff so you know what to do in this situation. 

It’s always stressful to hear that your employer is planning layoffs. Unfortunately, this is something that can happen to anyone. Even when you’re excellent at your job, if the company needs to cut costs, you could end up unemployed.

Being prepared for a layoff makes it easier to manage financially and to get back on your feet. Here’s what you should do if you’re worried about this possibility, or if you know that layoffs are on the horizon.

1. Start putting more money in your emergency savings

One of the reasons experts recommend having an emergency fund is so you can pay your bills if you lose your job. The most common guideline is to have enough in your emergency fund to cover three to six months of living expenses. Finding a new job takes about three months on average, according to ZipRecruiter, so having that much in your emergency savings could cover you until you get a new position.

RELATED: Emergency Fund Calculator

If you don’t have at least three months of living expenses put away yet, set aside as much money as you can for your emergency fund each month. Even if you already have that much, you may want to consider saving more for some extra peace of mind.

2. Make sure your resume is up to date

People who have jobs often let their resumes gather dust. It’s not the best habit, but it’s understandable. After a long day at work, you probably want to relax, not work on your resume.

Since you’re going to need to look for work, go over your resume to see if it’s ready to be sent out. Check that all the information is accurate and up to date, and then look for ways to improve it. There are plenty of free and paid resume builder websites you can use to help with this.

3. Plan what you’ll do for health insurance

A layoff doesn’t just mean losing your job. It could also mean losing your health insurance, too. This is a common concern, especially since 54.3% of the U.S. population has health insurance through an employer as of 2021, according to Statista.

There are health insurance options you can get while unemployed, but your costs may change, so you’ll need to see what works financially. Here are some of the most common ways to get health insurance after a layoff:

COBRA (short for “Consolidated Omnibus Budget Reconciliation Act”) is a federal law allowing workers and families to continue receiving health insurance coverage for a limited time period after a job loss.Medicaid is low-cost health insurance offered by state governments.The Healthcare.gov marketplace allows you to purchase health insurance online.

4. Research unemployment benefits

Workers laid off through no fault of their own are normally eligible to receive unemployment benefits. While these won’t replace your full income, they can help you use less of your savings as you look for a new job. Look up your state’s unemployment website to find out the following:

How to file for unemploymentAny requirement information and documents you’ll needHow long benefits lastYour expected benefit amount based on your income

By having this information, you’ll be able to file for unemployment right away if you’re laid off. You’ll also be able to better plan your personal finances, including your budget, based on how much money you’ll be receiving per month.

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5. Network and job hunt

Networking is another one of those things that’s good to do even while you’re employed. But if you haven’t kept up with it, now’s the time to start up again. Reach out to contacts to catch up and see what opportunities are out there.

Also, make job hunting a part of your daily routine. You can do this on job boards, with recruitment agencies, or by visiting websites for companies you’d be interested in working for. The best time to start doing this is while you still have a job, not after a layoff happens.

A layoff can be scary, but try not to panic or let it affect your mental health. If you follow the steps above to prepare for it, you’ll be more ready financially and potentially find a new job sooner.

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The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Lyle Daly has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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