I’m a Financial Advisor: 3 Money Moves To Make Now if You’re Worried About Your Job Security
Written by
Laura Bogart
Edited by
Kristen Mae
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There’s no doubt that a job loss can be financially and emotionally devastating. The American Psychological Association has even found that losing a job and staying unemployed for a prolonged period can lead to post-traumatic stress.
While you might be able to read the tea leaves in your workplace and sense when it’s time to update your LinkedIn, you may not always be able to jump to a new job fast enough to dodge the axe.
While nothing can fully prepare you for a layoff, there are certain financial moves you can make now to blunt the impact and help you stay afloat. Hopefully, your fears won’t come to fruition, but taking proactive action is a powerful way to transform anxiety into preparedness.
GOBankingRates looked into the best money moves to make now if you’re anxious about your job security.
Create Tiers of Savings
Hopefully, you already have an emergency fund with anywhere between six to 12 months’ worth of savings. But Brandon King, head of Personal Investor Cash at Vanguard, wants you to get even more granular by breaking your savings into multiple tiers to act as financial shock absorbers against the loss of regular income.
King wants you to set up a fund to cover what he calls “spending shock” — the unexpected expenses that arise even when you’re being careful. This fund should include at least $2,000 or half a month’s household expenses, whichever is greater.
He also recommends establishing an “income shock” tier, which is a more substantial financial safety net covering three to six months of living expenses.
It’s also important to have money set aside for short-term financial goals, such as a vacation, home renovation or house down payment, so you don’t have to put those plans on hold in the event of a layoff.
“By putting these funds in a high-yield savings account or high-yield cash management account, rather than a traditional bank savings or checking account, you can earn interest and grow your savings to help create an even greater financial buffer,” King said.
Set Up Recurring Deposits
To help you build your savings consistently, King suggests setting up small, recurring deposits from your paycheck directly into your savings. This not only ensures the money will go into your account as planned, even if you forget to put it there, but it also forces you to adapt to living at a lower spending threshold.
“Consider ways to cut back on your expenses to slowly increase that recurring deposit over time,” he said. “Additionally, identify other types of lump-sum income to supercharge your savings, like a tax refund, to help get you started.”
Look for Ways To Supplement Your Income
One of the most frightening aspects of a potential job loss is the uncertainty it creates. That’s why Jen Reid, financial planner and founder of Base, wants you to focus on the things you can control, like developing a side gig or other income streams.
“Start by exploring potential additional sources of income. This might include a side gig, freelance work, or contract opportunities,” she said. “It’s also wise to begin preparing for the job search process now. Update your resume, refresh your LinkedIn profile, and practice interview skills so you’re ready to act quickly if needed.”
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