How to Financially Prepare for a Layoff
- Money Management
- 3 days ago
- 12 min read
Picture this: You’re sipping your overpriced oat milk latte, juggling a dozen Slack messages, and feeling like the MVP of your team. Then, bam—an all-hands meeting pops onto your calendar with the kind of cryptic subject line that screams bad news. A few hours later, you’re staring at your desk plant, wondering if it’s worth lugging home. Layoffs never come with a heads-up, do they?
Let’s face it, layoffs aren’t exactly sent out via RSVP. One day, you’re debating the best GIF to drop in the team chat; the next, you’re figuring out how to stretch your savings until your next gig. But here’s the thing: while layoffs might be unpredictable, your financial readiness doesn’t have to be.
This guide is here to help you prepare like a pro. With practical steps to build a financial safety net, cut unnecessary stress, and take control of your future, you’ll be ready for whatever comes your way. Because whether it’s layoffs or just life throwing curveballs, a little preparation can make a world of difference. Ready? Let’s get started.
1. Build an Emergency Fund
Imagine jumping out of a plane without a parachute. Sounds terrifying, right? That’s what navigating a layoff without an emergency fund feels like—a freefall with nothing to catch you. Your emergency fund is your financial safety parachute, giving you a soft landing when life decides to throw a curveball.
Key takeaway: Save 3–6 months’ worth of living expenses in a high-yield savings account. This stash will cover the essentials—rent or mortgage, utilities, groceries, and other must-pay bills—so you’re not scrambling when the paycheck stops.
Actionable Tips:
Break It Down: Start by figuring out what your “essential expenses” are. This typically includes:
Housing: Rent or mortgage payments.
Utilities: Electricity, water, internet (because you’ll still need Netflix—let’s be real).
Groceries: Not the fancy stuff, but enough to keep you fed and fueled.
Transportation: Gas, public transit, or car payments.
Insurance: Health, car, and other must-have coverage.
Any other non-negotiable bills, like minimum debt payments.
Set a Target: Multiply your total monthly expenses by 3 for the bare minimum or by 6 if you want to sleep really well at night. Let’s say your essentials add up to $2,500 per month. Your goal? Stash $7,500–$15,000.
Use Tools to Help You Save:
Budgeting Apps: Apps like Mint, YNAB (You Need a Budget), or PocketGuard can help you track expenses and find areas to save.
Savings Automation: Tools like Chime or Digit automatically move small amounts into your savings, making it easy to hit your goal.
High-Yield Accounts: Look for a high-yield savings account (think Ally, Marcus, or Capital One 360) to earn more interest while keeping your money accessible.
Remember, building an emergency fund takes time—it’s not a sprint, it’s a marathon. Start small, automate your savings, and watch that safety net grow. The peace of mind is worth every penny.
2. Cut Back on Spending (Without Feeling Miserable)
Time to Marie Kondo your budget. If it doesn’t spark joy—or at least help you survive—it’s gotta go. Trimming the fat from your spending doesn’t mean living like a monk; it just means prioritizing what truly matters so you can stack up some extra cash.
Key takeaway: Small sacrifices now mean bigger financial relief later. Every dollar saved is a dollar you can use to weather the storm.
Actionable Tips: Easy Wins for Cutting Back
Cancel Unused Subscriptions: Haven’t logged into that obscure streaming service in months? Say goodbye. Apps like Truebill or Rocket Money can help spot and nix sneaky charges.
Cook at Home: Skip the $15 avocado toast, and put that money toward your emergency fund. (Bonus: You’ll probably get better at cooking.)
DIY Entertainment: Trade pricey nights out for free (or cheap) alternatives like game nights, park picnics, or streaming something you already own.
Pause Non-Essential Purchases: That new gadget or clothing haul? It can wait. Practice “want vs. need” thinking.
Energy Efficiency: Lower your utility bills by unplugging devices, using energy-efficient bulbs, and adjusting the thermostat. It adds up faster than you think.
Expense Comparison Table
Expense | Average Cost | Cheaper Alternative | Savings |
Dining Out (2x/week) | $160/month | Home-Cooked Meals (~$40/month) | $120/month |
Streaming Services (5) | $50/month | Keeping 1–2 favorites (~$20/month) | $30/month |
Gym Membership | $60/month | Free Workouts (YouTube, outdoors) | $60/month |
Coffee Shop Habit (daily) | $120/month | Brew at Home (~$30/month) | $90/month |
Monthly Savings Potential: Up to $300+ just by swapping these habits.
Cutting back doesn’t mean cutting out fun—it’s about spending smarter. The goal isn’t to feel deprived; it’s to feel prepared. Once you see those savings piling up, it’ll totally spark joy.
3. Pay Down Debt (Especially the Ugly Kind)
High-interest debt is like a ticking time bomb strapped to your wallet. Every month you let it sit, it grows—and not in the fun "compound interest for savings" way. When a layoff hits, those minimum payments don’t take a break. If you’re drowning in debt, it’s harder to stay afloat.
Key takeaway: Reducing debt now means fewer financial obligations if your income suddenly disappears.
Actionable Tips:
Prioritize High-Interest Debts:
Use the avalanche method to tackle debts with the highest interest rates first. This saves you the most money long-term.
Or try the snowball method to pay off smaller debts first for quick wins (and the satisfaction of crossing them off your list).
Debt Consolidation:
If juggling multiple debts is overwhelming, consider consolidating them. Look for a low-interest personal loan or balance transfer credit card. This can simplify your payments and potentially lower your interest rates.
Focus on Credit Cards:
These often have the highest interest rates. Even paying just a little more than the minimum can make a big dent over time.
Tackling debt now means you’ll breathe easier later, even if you’re between jobs. Plus, every dollar you free up can go toward your emergency fund or daily essentials.
4. Keep Your Resume and LinkedIn Profile Ready to Go
The time to polish your LinkedIn isn’t after you’re asked to pack up—it’s now. Think of your resume and profile like a virtual handshake: they’re your first impression for recruiters, and you want them to scream, "Hire me!"
Key takeaway: Updating these proactively means you can hit the ground running if the worst happens.
Actionable Tips:
Resume Refresh:
Highlight key achievements using numbers (e.g., "Increased sales by 20% in Q4" sounds way better than "Good at sales").
Tailor your resume for the types of roles you’d want next.
LinkedIn Glow-Up:
Use relevant keywords in your headline and summary (e.g., "Digital Marketing Expert | SEO Specialist").
Add recent certifications, skills, and projects to your profile.
Turn on job-seeker mode so recruiters know you’re open to opportunities.
Be Easy to Contact:
Make sure your contact info on both platforms is up-to-date. Nothing’s worse than missing a recruiter’s message because you’re still rocking your college email address.
Take Advantage of LinkedIn’s Features:
Use Easy Apply to submit applications faster.
Ask for endorsements and recommendations from past colleagues to boost credibility.
By keeping your resume and LinkedIn ready, you’re not just preparing for layoffs—you’re setting yourself up for bigger and better opportunities. Who knows? That proactive move might just land you your dream job.
5. Start Networking (Even if It Feels Weird)
Networking doesn’t mean awkward handshakes and small talk about the weather anymore. (Honestly, when was the last time you had a groundbreaking convo about rain?) These days, networking is more about building genuine connections—think coffee chats, LinkedIn comments, and sliding into someone’s professional DMs without it being weird.
Key takeaway: Your next job might come from a connection you already have. People love helping people they know, so start planting those seeds now.
Actionable Tips: Casual Ways to Network Without Feeling Cringey
Join LinkedIn Groups: Find professional communities in your industry and jump into conversations. Comment thoughtfully on posts, share relevant articles, or even ask a question. You’d be surprised how many people are willing to engage.
Grab Coffee (or Virtual Coffee): Reach out to former colleagues, industry peers, or even that one friend who’s always doing cool stuff. A quick, informal chat can open doors you didn’t even know existed.
Attend Low-Key Events: Look for local meetups, webinars, or conferences. These aren’t about handing out 50 business cards—they’re about meeting people who share your interests.
Leverage Mutual Connections: Ask mutual friends or colleagues for introductions. A warm intro can make all the difference when reaching out to someone new.
Build Relationships, Not Just Job Leads
Here’s the golden rule: don’t just show up when you need something. Networking is about creating relationships, not pitching yourself like a walking résumé. Ask about their career journey, share your goals, and offer help if you can. (Yes, even small things like recommending a podcast or sharing a useful article count!)
Think of networking as building a long-term safety net. You never know which thread will catch you when you need it most. And if all else fails, at least you’ll have made some new friends—or found someone to vent to about awkward weather convos. Win-win!
6. Know Your Rights (Because Knowledge Is Power)
Let me tell you about Sam, the office legend who turned a layoff into a masterclass on navigating severance. When Sam got the dreaded news, they didn’t panic. Instead, they calmly reviewed their severance package, negotiated for a better deal, and walked out with a financial cushion that made the rest of us wonder if they’d secretly been training for this moment.
Sam’s secret? They knew their rights—and so should you.
Key takeaway: Understanding your severance pay, unemployment benefits, and healthcare options gives you control over your financial next steps when a layoff happens.
Actionable Tips: What to Look for in an Employment Contract
Severance Pay:
Check if your contract mentions severance terms, like how many weeks of pay you’re entitled to or whether unused vacation days will be reimbursed.
Pro tip: You can negotiate severance, especially if you’ve been a long-term employee or the layoff is sudden.
Healthcare Options:
Know when your employer-provided health insurance will end.
Explore COBRA or alternatives like marketplace health plans to avoid a coverage gap.
Unemployment Benefits:
Review your eligibility for unemployment benefits, including how much you can receive and for how long.
Different states have different rules, so be sure to research specifics for where you live.
Resources to Check Out
Severance Negotiation Tips: Here’s a helpful guide to negotiating severance.
Unemployment Benefits by State: This resource explains eligibility and application processes for unemployment.
Healthcare Options Post-Layoff: Explore your options for health coverage after losing a job.
The big takeaway here? Knowledge is your superpower. By understanding your rights and options ahead of time, you can handle a layoff like Sam—cool, collected, and ready to take charge of your future.
7. Take Advantage of Employee Benefits Before They Disappear
Here’s the deal: your employee benefits are like a buffet—once the job ends, so does your access to the goodies. So why leave free money or perks on the table? If layoffs are even a whisper in the wind, now’s the time to squeeze every last drop out of your benefits.
Key takeaway: Use healthcare, retirement contributions, and other perks while you still can. Once you’re out the door, they’re gone faster than free donuts in the breakroom.
Actionable Tips:
Schedule Appointments Now:
Book your doctor, dentist, or therapy sessions before your insurance coverage ends.
Need glasses? Use that vision benefit. Got an FSA? Spend it before it expires.
Max Out Your 401(k) Match:
If your employer offers matching contributions, contribute as much as you can afford to maximize the match before your employment ends. That’s free money, people!
Check for Tuition Reimbursement or Training Opportunities:
Some employers offer reimbursements for education or certifications. If you qualify, don’t wait—file those claims now.
Use Wellness Perks:
Does your job pay for gym memberships, mental health apps, or wellness programs? Take advantage of them while they’re still covered.
By proactively using your benefits, you’re not just saving money—you’re making the most of the compensation you’ve already earned. Don’t let those perks go to waste! If layoffs are looming, treat your benefits like a clearance sale: grab what you can before it’s gone.
8. Consider Extra Income Streams
Your secret talent for designing memes or baking cookies? It could be your golden ticket. In a world where income can vanish in a flash, a side hustle isn’t just a nice-to-have—it’s your financial superhero cape. Not only does it bring in extra cash, but it can also lead to opportunities you never saw coming.
Key takeaway: A side hustle not only pads your wallet but might also open new doors—ones you didn’t even know you wanted to walk through.
Actionable Tips: Beginner-Friendly Side Hustles
Freelancing:
Got a skill like writing, graphic design, or coding? Platforms like Upwork, Fiverr, and Toptal make it easy to connect with clients who need your expertise.
Selling Products:
Crafty? Creative? Launch an Etsy shop for handmade goods, digital downloads, or vintage finds.
Not crafty? Consider dropshipping or flipping items on eBay, Facebook Marketplace, or Poshmark.
Teaching or Tutoring:
Share your knowledge on platforms like Teachable, Udemy, or Outschool. Bonus: You get paid to talk about what you already know.
Gig Economy Work:
Love driving? Try Uber or Lyft. Prefer delivery? DoorDash or Instacart are your jam.
Content Creation:
Start a blog, YouTube channel, or social media account around something you’re passionate about. While it takes time to monetize, the payoff can be worth it.
Pro Tip: Start Small
A side hustle doesn’t have to become a full-blown second job. Start with a few hours a week to test the waters.
Look for gigs that align with your interests or existing skills—if it’s something you enjoy, it won’t feel like work.
Whether it’s freelancing, flipping items, or turning your hobby into a moneymaker, a side hustle isn’t just a backup plan—it’s an investment in your financial future. Plus, who wouldn’t want to get paid for something they love? Go ahead, dust off those cookie recipes or that meme portfolio—your golden ticket awaits.
8. Consider Extra Income Streams
Your secret talent for designing memes or baking cookies? It could be your golden ticket. A side hustle isn’t just a quick way to pad your wallet; it’s also a chance to explore new opportunities, build skills, and maybe even find your next big thing.
Key takeaway: A side hustle not only provides extra cash but can open new doors. It’s like a financial safety net—and who doesn’t want that?
Actionable Tips:
Beginner-Friendly Side Hustles:
Freelancing: Use platforms like Upwork or Fiverr to offer skills like writing, graphic design, or social media management.
Selling Handmade Goods: If you’re crafty, set up shop on Etsy and turn hobbies like knitting, woodworking, or jewelry making into profit.
Driving or Delivery Services: Sign up with Uber, Lyft, or DoorDash for flexible work.
Tutoring or Teaching: Platforms like VIPKid or Skillshare let you teach others online, from math to music.
Content Creation: Monetize your knack for blogging, vlogging, or TikTok.
Start Small and Test the Waters:
Don’t overcommit—begin with one gig and see if it’s a fit for your schedule and goals.
Invest in free or low-cost tools to help you get started (e.g., Canva for design or Trello for managing tasks).
A little extra cash from a side hustle can make a big difference when navigating uncertain times—and who knows? Your small gig could turn into a thriving business.
9. Be Ready to Apply for Unemployment Benefits
Unemployment benefits aren’t anyone’s dream paycheck, but when the income stops, they can be a financial lifeline. The good news? The process doesn’t have to be a headache—if you prepare in advance.
Key takeaway: Knowing the process ahead of time saves stress later. It’s all about getting your ducks in a row before the clock starts ticking.
Actionable Tips:
Gather Your Documents:
Recent pay stubs or earnings statements.
Your Social Security number.
Information about your last employer (e.g., name, address, and dates of employment).
Check Your Eligibility:
Eligibility requirements vary by state, but most programs require you to have lost your job through no fault of your own and meet minimum income thresholds.
Apply Quickly:
File as soon as you’re laid off, as some states have waiting periods before benefits start. Procrastination means missed paychecks.
Where to Apply:
Visit your state’s unemployment website. Here’s a list of unemployment resources by state for easy access.
Unemployment benefits might not be glamorous, but they can give you breathing room while you figure out your next move. Don’t wait until it’s crunch time—get familiar with the process now, so you’re ready to hit the ground running if the need arises.
10. Stay Informed and Seek Help if Needed
You don’t have to DIY your way through financial stress—help is out there. Whether it’s tackling debt, creating a budget, or planning your next steps, there are people and resources ready to guide you. The first step? Knowing you don’t have to do it all alone.
Key takeaway: Use free financial counseling and educational resources to lighten the load and make smarter money moves.
Actionable Tips:
Tap Into Reputable Organizations:
National Foundation for Credit Counseling (NFCC): Offers free or low-cost credit counseling to help you manage debt and create a financial plan.
Financial Planning Association (FPA): Look for pro bono financial planning sessions in your area.
211 Helpline: A free service that connects you to local resources for financial assistance, job training, and more.
Lean on Your Community:
Talk to trusted friends or family members who’ve been through similar challenges—they might have advice or even a connection that leads to your next opportunity.
Join online communities, like Reddit’s personal finance threads or local Facebook groups, where people share tips and support.
Educate Yourself:
Take advantage of free online resources like Investopedia, Khan Academy, or your local library’s financial literacy workshops.
If you have access to an employer’s financial wellness program, use it before it’s gone.
Financial stress can feel isolating, but you’re never truly alone. By seeking out help and staying informed, you’ll not only navigate tough times—you’ll come out stronger on the other side. Sometimes the bravest move is simply asking for support, and there’s no shame in that.
Conclusion: You’ve Got This (Even If It Feels Scary)
Let’s be real: layoffs can feel like a sucker punch to your plans, but they don’t have to derail your financial goals. With a little preparation and a solid plan, you can weather the storm and even come out stronger on the other side. Think of it this way: every step you take now—saving, cutting back, networking—puts you one step closer to peace of mind and financial independence.
And remember, you’re not in this alone. To help you plan for whatever life throws your way, check out our free budget and retirement calculator or sign up for a free consultation with a CPA. Whether it’s creating a plan to navigate a layoff or building a future you’re excited about, we’re here to make the process as easy (and stress-free) as possible.
You’ve got this. The road ahead might look a little bumpy, but with the right tools and mindset, you’re more than ready to take it on. Now go crush it.