Ramit Sethi: 5 Things To Do With Your Finances If You Lose Your Job
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Gabrielle Olya
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Molly Sullivan
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If you’ve recently lost your job, you’re not alone in your current struggle. In the tech field alone, over 140,000 people have been laid off in 2024, according to Layoffs.fyi.
Even if you have an emergency fund, figuring out how to navigate your new financial reality can be difficult. In a recent newsletter, money expert Ramit Sethi shared his advice for a recently laid-off project manager, who fortunately did have a healthy emergency fund. But he still recommended making some major adjustments during her period of unemployment.
Here is Sethi’s advice for the steps you should take if you lose your job.
Don’t Be Afraid To Tap Into Your Emergency Fund
A job loss certainly qualifies as an emergency, so don’t hesitate to tap into any emergency savings you have. Ideally, this fund should contain three to six months’ worth of living expenses.
“You saved for an emergency, so use it,” Sethi wrote. “This is what the money’s for.”
Be Aggressive About Your Job Search
Losing your job can be a tough pill to swallow, and your instinct may be to wallow over your new reality. Unfortunately, time is money, so it’s important to be aggressive about finding a new job ASAP.
“In my opinion, getting a job is the No. 1 thing you should be focusing on right now,” Sethi wrote. “One of the great challenges of losing a job is that, when you lose a job, others around you tend to be losing theirs as well. That’s why it’s imperative to find another job quickly.
“It’s very much like playing the real-life version of adult musical chairs,” he continued. “You do not want to be the last one standing. So, in my opinion, your priorities are clear. Get aggressive about it and set ambitious goals. Network, talk to everybody and send out applications.”
Cut Down on Your Housing Spending
Housing is typically your biggest expense, so you should look for ways to cut this cost. Sethi recommended getting a roommate if you are currently living alone.
“Get a roommate immediately,” Sethi wrote. “If it were me, I would say, ‘I’m getting a roommate by the end of the month.’ No trying, no hoping — just make it happen.”
Put a Pause on Saving and Investing
Saving and investing for retirement and other goals should be a priority when you have income coming in, but you should pause any contributions while you are unemployed.
“Stop saving and investing,” Sethi wrote. “That money is properly used for life.”
Cut Back on Discretionary Spending
Even if you have a healthy emergency fund that can support your current spending habits, it’s best to cut back drastically on any spending that isn’t 100% necessary.
“I would immediately chop guilt-free spending down to 10% or less,” Sethi wrote. “This is an emergency, so treat it accordingly.”
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