Whether anticipated or not, a personal crisis like the loss of regular income and a steady routine can be a big blow to your budget and mental health. If you’ve been laid off or lost your job, your first instinct might be to panic, but that won’t help. Instead, channel your frustration or anxiety into quick action. These tips will help you know what to do immediately after you get laid off or lose your job so you can get back on financial track and preserve your drive and confidence in the process.
Cut Your Spending
Each individual’s or family’s situation is different. Maybe your layoff package includes severance pay to cover you for a while, or maybe you’re left without a layoff package and only a short time to figure out how to make ends meet. Whatever the scenario, go through your bills and cut unnecessary spending. If you’ve been ordering pricey takeout or indulging in overpriced lattes, change your habits immediately. If you have a cable bill, cut services until you retain reliable income. Be honest with yourself about needs and wants so you can adequately trim excess expenses.
Create a New Budget
Make a new budget of the bills and living expenses you must maintain until the next time you’re hired. Take a close look at your emergency fund and how far it will stretch on this new budget. That will give you the best picture of your financial health and make it clear if you need to cut further or find alternative solutions during your unemployment period. This might seem like a scary process, but digging into your accounts and budgeting immediately will save you surprises down the road. It will also help you figure out if you need to borrow money or seek temporary employment before finding your next dream position.
Evaluate Job-Related Finances
You may still have benefits tied to your former employer. Certain employers and labor unions have benefit plans that give laid-off employees supplemental unemployment compensation. An employment contract or collective bargaining agreement including a severance package may tide you over for some time.
If you were regularly contributing to your former employer’s 401(k) or other retirement plan, you might want to keep your money in that plan. Another possibility is rolling over your 401(k) into an individual retirement account (IRA). Pension plans have different rules about distribution, such as the age you need to reach to qualify and how much time has passed since you have left the company. Contact your pension plan administrator about the rules of your pension distribution. Also, make sure you have a copy of the summary plan description, which describes your benefits and how they’re calculated, from your employer or pension plan administrator.
Look into Health Insurance Coverage
Although you have lost your job, you may have the right to continued health benefits for a while as you search for a new position. COBRA may allow you to buy temporary extended healthcare benefits through your former employer. Your spouse’s health insurance plan and governmental programs are other options.
Apply for Unemployment Benefits and Consider Private Insurance
You may be eligible for state unemployment benefits. Ask your local unemployment office to see if you qualify, as you can receive at least 26 weeks of benefits and may even be eligible for more. Job loss insurance, or supplemental unemployment insurance, dispenses income after a layoff. This private insurance requires monthly payments for premiums. Another form of short-term aid is payment protection insurance, which covers loan, mortgage, car and credit card payments if you’re in financial need because of unemployment or temporary disability.
Take Stock of Your Career
Use this period to take the time to reflect on whether you were happy in your previous job or if your interests have changed. You might be tempted to immediately send out your resume in your current field, but if you weren’t enjoying your work or have concerns about the success of the industry, maybe it’s time to try a career change or even branch out on your own.
Retool Your Resume
Once you decide on your career path, you’ll know what route to take with your resume. If you were at your most recent job for a while, chances are the document you used to land it is a little dusty or outdated. Do some research on resumes in your target industry and revamp yours accordingly.
Make a Plan for the Future
Once you perfect your resume, start getting it into the hands of potential employers. Or if you’re planning to go back to school or start your own business, move forward with that. Whichever route you’re going, make a plan and execute it. After a job loss or layoff, your days are unexpectedly free, and it can be easy to fall into a slump. It’s OK to take some time to spend with family or do something you enjoy, but don’t wait too long to tackle your next steps. Focusing on your plan of action will motivate and energize you, while also boosting your self-confidence.
Talk About It
Don’t forget to talk about the layoff or job loss with close friends or family members. Remember, you’re not alone. Others who have gone through this situation may be able to provide layoff advice. If you’re experiencing anxiety or depression, talk to a professional who can help.
Plan for a Comeback
Figuring out what to do when you get laid off can be stressful but coming up with a plan is the first step to getting back on your feet. Your Farm Bureau agent is here to help. Contact your agent today.