Worried about your job? Here’s how to plan for a layoff!
Preparing Financially for a Possible Layoff
Recent months have been turbulent for many federal workers, with furloughs, layoffs, and ongoing uncertainty. Yet, the lessons from their experiences apply to everyone: if your job security looks shaky, having a clear financial plan can make a world of difference.
Start by Understanding Your Expenses
Before anything else, figure out where your money goes each month. Knowing your spending patterns helps you determine what’s truly essential versus what you can temporarily cut if your income suddenly drops.
“Make sure you’ve got the hierarchy of needs — food, shelter, and health care — covered,” said Stacy Miller, a certified financial planner and CEO of Bayview Financial Planning in Florida. “It’s about reprioritization.”
This means focusing first on your mortgage or rent, utilities, and medical needs. Some bills can wait — for example, paying your mortgage is far more important than paying down credit cards. Still, Miller recommends at least making minimum credit card payments to avoid late fees and damage to your credit score.
If you’re currently in a good position, consider tackling high-interest debt while you can. Choose a paydown method that motivates you most — either targeting the debt with the highest interest rate or the largest balance.
Build (or Boost) Your Emergency Savings
An emergency fund is your financial cushion during tough times. Standard advice suggests saving three to twelve months’ worth of living expenses in an easily accessible account, such as a high-yield savings account.
If your emergency fund isn’t where you’d like it to be, start small. Even setting aside a bit from each paycheck helps. And if you suspect layoffs are coming, you might temporarily pause your retirement contributions and divert that money into your emergency savings. Some employers even allow penalty-free 401(k) withdrawals for emergencies — it’s worth checking.
Homeowners might also explore a home equity line of credit as a last-resort backup, but use it only if absolutely necessary.
Estimate Your Income If You’re Laid Off
Once you understand your spending and savings, look into what money might continue to come in after a job loss. Check if your employer offers any severance pay and for how long your health benefits will be covered.
Then, research your state’s unemployment benefits — payment amounts, eligibility requirements, and the waiting period before the first check. You can find this information on your state’s labor department website.
Don’t forget to factor in any other income sources. Maybe you have rental income, investment dividends, or a spouse who earns money. If possible, you could even consider taking on a short-term or part-time job to keep cash flowing.
Find Support and Guidance
If you’re uncertain how to manage a layoff financially, seek professional advice. Nonprofits like SAVVY Ladies offer free financial education and guidance, particularly for women. Unions, community centers, and religious organizations may also provide free consultations or financial help.
If you do lose your job, immediately contact your creditors and service providers — many are willing to adjust payments or set up hardship plans. For instance, banks and credit unions often provide fee waivers, temporary loans, or special assistance for laid-off or furloughed workers.
Federal employees and military members have additional options. Organizations like the National Active and Retired Federal Employees Association (NARFE), Army Emergency Relief, and Blue Star Families can help. During recent shutdowns, federal workers even created shared online spreadsheets to crowdsource helpful resources.
A Harsh Reminder for Everyone
During the first several months of the Trump administration, the U.S. government saw widespread layoffs and, more recently, hundreds of thousands of workers were furloughed without pay during the shutdown. Just last week, Russell Vought, head of the Office of Management and Budget, announced another round of cuts, and more agencies are reportedly considering the same.
Whether you’re a federal employee or not, these events serve as a powerful reminder: no one’s job is completely secure. What you can control, however, is how well you prepare.
By tracking your spending, building savings, understanding your safety nets, and knowing where to find help, you can protect yourself from the financial shock of unexpected unemployment.
