Almost Half of Americans Don’t Have Enough Savings to Last 3 Months After a Layoff. Do These Things if You’re One of Them

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It’s important to be prepared for a layoff at all times. Read on for ways to boost your emergency savings. [[{“value”:”

The tough thing about layoffs — aside from the loss of people’s paychecks — is that they’re not always performance based. You can be the most loyal, dedicated, and well-liked employee, but if budget cuts come down the pike, your job could still land on the chopping block.

You need to be ready for a layoff at all times. And that means having a solid emergency fund — ideally, enough money to cover at least three full months of essential expenses.

After all, it might take you a good 90 days to go from being laid off to being gainfully employed. So it’s important to have savings you can use to pay your bills during a period where you’re forced to go without a paycheck.

But recent Quicken data finds that 48% of Americans don’t have enough money in the bank to last three months if they were to lose their source of income. If you’re part of that statistic, it’s imperative that you do what you can to build some cash reserves. Here’s how.

1. Do a spending audit and start making cuts

If you’re ordering takeout three times a week and paying for three different streaming services, but you’re also fully set with emergency savings and are on track to meet your other financial goals, then carry on. But if you don’t have enough savings to get through a three-month period of unemployment, then it’s time to do a review of your spending and look at making cuts.

This doesn’t mean you can reasonably be expected to stop paying for anything fun or convenient. But if you’re currently in the habit of using rideshare services four times a week, you may want to cut back to two and take the bus to save money those other two times. And if you buy a $5 coffee seven days a week, you may want to make that speciality latte a once-a-week thing.

2. Boost your income with a side gig

Spending cuts might help free up money for your emergency fund. But at the same time, it could be a great idea to pick up some gig work and use the extra earnings to boost your savings.

Think about your schedule. Are you free nights and weekends only, or are you available for early morning employment? If so, you may, for example, find a steady gig helping a working parent in your building or on your block get their kids off to school in the morning before you start your day. You may be surprised, in fact, at how easy it is to squeeze gig work into your schedule. Great gig platforms like Upwork and TaskRabbit may also help you find freelance work.

3. Bank your tax refund

As of March 29, the average tax refund issued by the IRS was $3,050. If you’re getting a similar refund and are low on savings, it pays to put all of that cash into the bank.

Sure, you may have had it earmarked for a vacation or a down payment on a new car. But before you use that money for something you can technically do without or put off, consider how important it is to have those funds available in case you find yourself out of a job.

Of course, if you’re starting off with truly no savings, your tax refund may not even be enough to complete your emergency fund. But it may be a good start. If you put a $3,000 refund into savings, which is the equivalent of a month of essential bills, and you lose your job three weeks later, you’ll at least be covered for your first 30 days without an income.

Unfortunately, layoffs can happen at any time. Be prepared so a layoff doesn’t drive you into serious debt and upend your finances for years to come.

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