Laid Off? Here's What You Do

It seems like headlines have been filled with news around the latest company layoffs - from tech to manufacturing to media, but as we go on outside of the pandemic - those layoffs haven’t stopped. What was once headlines is now “hidden” to only be talked about via social media. I knew something was up. 

I was scrolling and saw on Bloomberg where companies are laying off, but also aren’t being so nice about it, yet nasty. The “Nasty Work” that they are doing now is not only the “how” of the layoff but also the ‘next’ of it all. This article highlighted how 2 out of 3 organizations offered severance to laid-off employees in 2021– that figure is nearly less than half. Only 42% of the 430 firms surveyed worldwide are offering severance to employees, down from 64% in 2021 and 44% in 2019.

Simply put, more people are getting laid off with little to no severance. Yes, you read that right. When we are experiencing inflated costs of living. I remember a couple of my laid-off situations in the past — one where I got only two weeks and the other never being paid my last check. And what saved me during the latter was the savings that I was able to do from my lesson during the first.

We often hear about the career aspects of what to do when you’re laid off, but never the currency or financial aspect of the event and how to even handle it.

If you’re reading this and either feel that you’re about to be laid off or have found yourself laid off, I wanted to walk you through what to do in case of a layoff. I talked about building your emergency fund or how I see it, an opportunity fund for you to save yourself during uncertainty. Please look at this if you’re preparing for the just-in-case and want to build your savings up.

With more than 90% of the firms and companies surveyed worldwide saying that they plan some workforce reduction in the next year, I wanted to pull this post together - no matter if you’re a casualty of the pandemic over-hiring or if it’s years later when you’re not so randomly let go.

1. Give yourself grace: you didn’t do anything wrong, it’s time for you to become an asset that’s appreciated elsewhere. Look into Calm or Headspace if you need some additional alignment. Also, your pending insurance might allow you to still get a couple of sessions with a “lady”. Therapy is key!

2. Audit your current financial situation: how are you doing financially? Do you have any additional income streams to lean on? Also, how are your expenses? How does your savings look? Break it down into these areas:

Income: Determine the amount of severance pay, unemployment benefits, and any other income sources you may have. We’ll touch on how to budget in the next section.

Expenses: Identify your essential and non-essential expenses, and make adjustments to reduce unnecessary spending. Not only that, look to see how you could learn what you used to do but leverage it within your new financial situation.

Savings: Check your emergency fund and determine how long it can sustain your living expenses. Even if you didn’t save for 3-12 months like social media tells you to do, knowing how much you have will allow you to know what other options you may have to lean on.

Assets: Evaluate your assets, like any investments, retirement accounts, or personal property, that could be liquidated to provide financial support. Your emergency fund isn’t the other way that you could keep yourself going during this time.

3. Create a skeleton budget: look at how you are spending, billing, and saving with the income you had and compare it to another severance you could have but also unemployment benefits. Could you float in case UI benefits lag payout or become exhausted? I talked about that here.

-Develop a detailed budget that outlines your income and expenses. Allocate your income towards essential needs such as housing, food, utilities, and transportation.

-Prioritize paying off high-interest debts to reduce financial burden.

-Move around payment dates that will fit what you can pay and when. Communicate with not only your landlord/mortgage company, bank, or utilities to let them know your situation.

4. Learn about other benefits:  knowing what you have to work with when you leave that your former employer could give you - from your retirement to RSUs to CORBA (here are some alternatives), learn about how they are handled, and if you could leverage them. Knowing the terms will give you some traction on how to handle the season you’re in. Also, check to see how certain things will be processed but also if there’s any time sensitivity about them. 

5. Look into your strengths to build income: yes, you could use gigs like DoorDash or Uber, but look into your skills to help pay the bills. Outside of that, you can look into these options: 

• Temporary and contract work: Positions with temporary agencies or staffing firms can provide short-term employment.

• Freelancing or consulting: Offer your skills and expertise as a freelancer or consultant to generate income on your terms. I used to use UpWork but leaned on my network to get work and clients. 

• Delivering food, groceries, or other gigs: Gig platforms like DoorDash or Instacart offer on-demand delivery services for flexible work. Be mindful of what deliveries you take and how much wear and tear it could have on your car. Keep receipts for tax purposes. Always look for peak hours and set a stride. I’ve been a Doordash and UberEats delivery driver before, again - I know. Knowing how much the base is is another clutch. There’s also Instawork, Shipt, and Roadie. Also, how can we forget AmazonFlex?

6. Just in case: Knowing your financial assistance options: Listen, I learned how to budget when I was laid off in 2010 with Unemployment benefits and food stamps - so I get it. I want you to get it too! In case things get dark, consider government programs or non-profit organizations that offer financial assistance to laid-off individuals. Some may include:

• Food assistance programs: Some organizations provide food vouchers or assistance to meet basic food needs.

• Housing assistance: Programs such as Section 8, Mortgage Assistance, and rental assistance may help with housing costs.

• Credit counseling: Seek guidance from credit counselors to manage debt and improve creditworthiness.

• Your creditors/utilities: Find out about anything that could help with your bills. This is why communicating with them along the way is important. Don’t want until the last minute to leverage what they could be offering. I shared about this during the height of the pandemic, tons of people called about their auto loans and were still able to keep their cars. Trust me, talk to them. 

7.  Develop a Long-term Financial Plan ( you knew I was going here, right?!): Don’t just focus on your now, but your next. You can still build towards how you envision your financial life to be. Once you secure a new job, revisit your financial plan to establish a sustainable budget and manage your finances effectively for the future. I talked about this on this TT.  Consider these strategies:

• Re-build your emergency fund: Aim to save enough money to cover 3-9 months of living expenses in the event of another job loss. Break it down into chunks. Learn to see what could be your rate of rebuilding within your new paycheck.

• Pay down debts: Got debt during that layoff? Prioritize paying off high-interest debts to save money on interest and reduce financial strain.

• Contribute to retirement accounts: Start saving for retirement early to accumulate a substantial nest egg for your future. Also, those old 401Ks/403Bs - roll them over into a new IRA (Roth/Traditional) to yield another stream of retirement income.

By implementing these financial strategies, you can navigate a layoff with greater resilience and set yourself up for long-term financial stability. I’m rooting for you. I shared a guide a while ago for how to handle your recession, get it here. I believe that medical emergencies and layoffs can count towards a personal recession when our federal government is slow to call what we’re seeing a thing. 

If you need to work with a Financial Planner who “gets it”, let’s get it together.