If layoffs scare you, you’re not alone. Job cuts are common in today’s world. They most frequently occur during a recession, when the economy slows down significantly over several consecutive quarters. But companies lay off smaller groups or individual employees for other reasons, too, such as a merger or acquisition, the consolidation of work sites, or the elimination of certain organizational roles.
Now, for the good news. There are things you can do today to significantly lesson the financial blow of a potential layoff. Each of the proactive measures below make good financial sense regardless of your job security. Worst-case scenario: they see you through a layoff with the least amount of financial pain. Best-case scenario: they improve your financial fitness and maybe even increase your net worth.
1. Reassess your budget situation.
Take a few minutes to ask yourself five important questions:
- Have you established a budget that accounts for all your incoming and outgoing cash?
- Are you using budget rules to divide your income into needs, wants and goals?
- Do you track your actual spending and compare it to your budget?
- Are you sticking to your budget every month?
- Are your savings accounts working for you and earning as much interest as they could be?
If you answered no to any of these questions, it’s time to commit to living on a budget.
2. Opt for a bigger emergency fund.
Even if you answered yes to each question above, adopt the following cost-cutting hacks to increase the amount you’re able to set aside each month into your emergency fund:
- Save at the grocery store by embracing store brands, stocking up on sale items and couponing.
- Meal prep and plan to reduce food waste.
- DIY routine car maintenance like changing out windshield wipers and air filters.
- Save on gas by shopping around for the best price and slowing down.
- Trim landscaping costs by waiting for end-of-season sales and not cutting your grass too low.
- Lower your entertainment spending by staying local and splitting costs with friends.
- Spend less on home furnishings by shopping at thrift stores and yard sales.
- Use mobile apps to save money on your prescriptions.
- Build a work wardrobe for less by shopping for quality basics on sale or at consignment stores.
The minimum recommended amount for an emergency fund is three months’ worth of expenses, but six months is better. If the odds are high that you’ll be laid off in the coming months, try to set aside even more to give yourself the biggest possible budget buffer.
3. Pay down your debt.
The money you save by cutting back on monthly expenses can also be used to pay more than the minimum on your credit card bill. If you have more than one card, either use the snowball method, which focuses on paying off the smallest balance first, or the avalanche method, which works by paying off the card with the highest interest rate first (Note that the avalanche method will cost you less time and money, but some people like the “quick wins” associated with the snowball method to keep them motivated).
While you’re paying down your current credit card balances, avoid charging more to them with these tricks:
- Plan to pay with cash when you go out.
- Remove all but one credit card from your wallet and store the rest in a safe place.
- Vow to only use the card left in your wallet for emergencies.
4. Look for additional income sources.
If you’re living as frugally as possible, consider ways to bring in more income to put toward your emergency fund and then your credit card debt. Here are a few ideas:
- Get a part-time job, take on gig work or consider an online side hustle
- Throw a yard sale or sell your old clothes
- Set up a dropshipping business. Who knows, it may be so successful that you’ll eventually become your own boss full time, leaving layoff worries behind.
5. Learn a new skill or volunteer for projects.
The more qualified you are for a job, the less likely you may be to get laid off. You can expand your skill set by shadowing a more senior colleague, taking on special projects or enrolling in a night class or certification course. These tactics will also make it easier to find a new job if you do get a pink slip.
6. Update your resume.
Don’t wait until you’re out of a job to pay attention to your resume. Routinely add in any new skills you’ve acquired or additional responsibilities assigned to you, and record your latest accomplishments. Demonstrating tangible results on your resume is the best ways to stand out in a crowded field of candidates.
7. Work your network.
Just like your resume, don’t let your network languish when you’re gainfully employed. Routinely phone, email, text or DM former managers, current and previous work colleagues and other strategically connected contacts. By staying in touch during good times, it will be much easier to ask them to recommend you for a job opening when you most need it.
You’ll never regret taking these steps to prepare for a layoff because they’ll improve your financial situation whether a pink slip materializes or not.
Editor’s note: Quorum is not affiliated with any of the companies mentioned in this article and derives no benefit from these businesses for placement in this article.