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What to do if you’re laid off

How to budget and plan for the time between jobs

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Nobody wants to get laid off, but it’s hard to make it through an entire working life without having at least one period of unexpected unemployment. With the economy in flux and a potential recession on the horizon, knowing what to do if you’re laid off can help you and your family manage the financial stress that often accompanies these kinds of cutbacks.

We asked the experts how to deal with getting laid off. Here’s how they suggest you can budget and plan for the time between jobs, and a step-by-step guide to help you prepare for whatever comes next.

In this article:

1. Let your network know you’re available

Many job losses can be reframed as job opportunities — the chance to contact your network, for example, and let them know you’re ready to build your career. By letting your network know you’re available, whether you meet a former classmate for coffee or spread the word on social media, you’ll be more likely to connect with people who can help you make your next career move.

If you can begin the job search process before you get laid off, that’s even better. Many companies telegraph their upcoming belt-tightening long before they begin scheduling those difficult conversations with Human Resources.

So if it looks like your employer is going to be making staff cuts, see if you can get out ahead of the scissors. Let your network know you’re trying to build your career, update your resume and your LinkedIn profile, and see if you can transition from a struggling company to a thriving one.

2. Get your healthcare taken care of

When you lose your job, you may also lose your health insurance — so see if you can get your healthcare taken care of before your benefits are scheduled to end.

“Squeeze in your important doctor’s appointments before your healthcare runs out,” advises Amanda Grossman, a Certified Financial Education Instructor who runs the money management website Frugal Confessions. “In many cases, you’ll only have until the end of the month.”

While newly unemployed workers can apply for health insurance through the Affordable Care Act Marketplace, you may end up with a higher deductible or more expensive copays — which is why it’s a good idea to get those healthcare appointments taken care of while you’re still on your employer’s plan.

Some laid-off workers are able to sign up for COBRA, a temporary health insurance coverage option that allows you to remain with your current plan for a limited period of time, but COBRA is often more expensive than people realize.

“We got a high-deductible health insurance plan when my husband got laid off,” Grossman explained, “since COBRA coverage would’ve been a staggering $1,837.82 per month for us.”

3. Survey your income sources

Just because your job ends doesn’t mean your household will immediately stop earning income — which is why Grossman advises laid-off workers to survey their income sources, and tally up all of the money that is likely to come their way.

“What will you have coming in, after your last paycheck or two comes through?” she asks. “Will you get a severance package or unemployment pay?”

In addition to any final paychecks or severance checks associated with your current employer, your household is likely to have other sources of income that you can count on. Maybe you and your partner both work traditional 9-5 jobs, for example — or maybe one of you has a small business or a side hustle. You should also add up any tax refunds, birthday checks or credit card rewards you might be able to access, since you’re now in a situation where every penny counts.

“Business income, side gig income, gift cards,” says Grossman. “Anything that can help you pay your bills.”

4. Reduce your expenses

When you get laid off, it’s time to reassess your spending habits. This might mean cutting back on streaming services or switching to home-cooked meals — or it might mean using a budgeting app to create a new spending plan for your household.

“The first move is to cut discretionary purchases,” advises Andrea Woroch, a personal finance expert who offers simple budgeting tips for busy moms. That said, she understands that you’re not going to stop spending completely. “There are things you need to buy no matter what, so make sure you’re shopping savvy to get the most from your budget.”

Woroch has a lot of experience helping people learn how to buy what they need without spending more than they can afford.

“Look for used options first before buying anything brand new,” she suggests. “You can save up to 70% off sporting goods at SidelineSwap, up to 60% off electronics, appliances and power tools by purchasing certified refurbished models from reputable retailers like Amazon and Best Buy and up to 70% off clothing, accessories and shoes through fashion resale sites like Poshmark. You can also score free kid’s clothing by swapping through Swoondle Society and join Buy Nothing Groups on Facebook to trade other goods with people in your community.”

Woroch also recommends saving money by installing price-tracking apps and browser extensions that can help you quickly locate the best deals. “Try Sidekick from Coupon Cabin which automatically adds coupons and cash back to your online cart at checkout and PriceBlink which automatically finds the cheapest buying option online for you.”

5. Use your emergency fund

If you have an emergency fund, now is the time to use it. Many financial planners recommend having 3-6 months of living expenses in a high-interest savings account, although most people understand that this isn’t always feasible. “If you didn’t have time to save the money, then that’s even more motivation to negotiate for a good severance package,” says Grossman.

Once you get your next job, you can start setting aside a percentage of your paycheck every month. That way, you’ll be prepared the next time you have to deal with an unexpected expense or loss of income. “Saving up an emergency fund ahead of time is always going to be the smart move,” Grossman explains.

6. Manage your debt

If you have credit card debt, there are ways to manage your credit card balances during unemployment without letting monthly interest charges add even more stress to an emergency situation.

“Don’t worry about paying off your credit card balance when you’ve lost your job,” Woroch advises. “However, you do want to worry about interest piling up. The best move to make when you’ve lost your job is to transfer your credit card balance to a 0% balance transfer card. This gives you anywhere from 12 to 21 months to avoid paying interest, so you can find a job and get back to paying down your debt.”

You can also reach out to your credit card issuers and ask them about hardship programs. These financial assistance services, many of which were expanded during the first years of the pandemic, allow cardholders to lower their interest rates, increase their credit limits, consolidate their debts and — in some cases — temporarily pause their credit card payments. A good credit card forbearance program could make the difference between managing your credit card balances and falling behind on your debt obligations.

7. Upgrade your skills

Once you’ve reached out to your network, taken care of your health, surveyed your income sources, updated your budget, tapped your emergency fund and dealt with your debt, it’s time to start thinking about the next stage of your career.

In some cases, you’ll be able to find a new job with the skills you already have. In other cases, you may need to upgrade your skills for your job hunt — by taking a class, getting a certification or starting a business of your own.

Whatever you do next, you’ll have already done the work it takes to manage a layoff with as little stress as possible. The rest is up to you, so start applying yourself — and when you’re ready, start filling out those job applications.

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About Nicole Dieker

Nicole Dieker has been a full-time freelance writer since 2012, with a focus on personal finance and habit formation. In addition to Haven Life, her work regularly appears at Lifehacker, Bankrate,, and Vox. Dieker spent five years as a writer and editor for The Billfold, a personal finance blog where people had honest conversations about money, and is the author of Frugal and the Beast: And Other Financial Fairy Tales.

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Haven Life is a customer-centric life insurance agency that’s backed and wholly owned by Massachusetts Mutual Life Insurance Company (MassMutual). We believe navigating decisions about life insurance, your personal finances and overall wellness can be refreshingly simple.

Our editorial policy

Haven Life is a customer centric life insurance agency that’s backed and wholly owned by Massachusetts Mutual Life Insurance Company (MassMutual). We believe navigating decisions about life insurance, your personal finances and overall wellness can be refreshingly simple.

Our content is created for educational purposes only. Haven Life does not endorse the companies, products, services or strategies discussed here, but we hope they can make your life a little less hard if they are a fit for your situation.

Haven Life is not authorized to give tax, legal or investment advice. This material is not intended to provide, and should not be relied on for tax, legal, or investment advice. Individuals are encouraged to seed advice from their own tax or legal counsel.

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