How To Prepare for a Layoff During a Recession
As many companies across the United States conduct mass layoffs and uncertainty grows in the U.S. labor market, countless individuals may be concerned that these warning signs may impact their jobs. However, what everyone has the ability to do right now is prepare.
In the event of a layoff, take the following steps to ensure the protection of your finances and health, and ready yourself for the next steps in your career.
Get Your Annual Exams, Now
If you have health insurance through your employer, do not delay on scheduling appointments to see the doctor, dentist and any other care physician.
Fo Alexander, CFEI and founder of Mama & Money, said that although you are able to extend your healthcare coverage through COBRA, doing so will come at a premium. If you know a layoff is imminent in your workplace, plan now to take care of yearly exams. Those with dependents should make sure they get their exams, too.
Max Out Your HSA
Those with a health savings account (HSA) will need to max out their plans, if possible. Alexander said once you are no longer covered by a high-deductible plan, you won’t be able to contribute to HSA anymore.
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“Having these funds available can really come in handy when you’re having to pay for medical expenses out of pocket. With this money already set aside, you won’t have to worry about the added medical expense,” said Alexander.
Save Money, Reduce Expenses and Pay Debts
In the wake of job loss, you’ll need money set aside to readily access to cover expenses. Continue saving money, building up your emergency fund and paying off any outstanding debt or reducing expenses.
Danielle Miura, CFP and founder of Spark Financials, said even if you plan on filing for and receiving unemployment it won’t replace your previous paycheck. In this time of uncertainty, you will want to focus on saving as much as you can. Review your budget and determine which unnecessary expenditures can be cut back or debt that can be paid to mitigate your financial risk.
“If you are expecting to be laid off soon, make an effort to pay off your high-interest debts,” said Miura. “When your finances are tight, paying a high-interest loan will make it more difficult for you to pay it off.”
Utilize All Company Benefits
Generally, it’s not likely that someone laid off is able to access their employer benefits afterwards. In addition to seeing the doctor and maxing out your HSA, contribute as much to your company 401(k) plan as possible and get the match from your employer.
Review Your Employer Handbook
Do you know what will happen to your 401(k) plan in the event of a layoff? Is there a policy about paid time off (PTO) payouts? Are you eligible for severance pay? If you don’t know the answers to these questions, Miura recommends reading your employer handbook to better understand your company’s policy.
“Check to see if your company offers a severance package for those that are let go,” said Miura. “There is no obligation from the employer to provide a policy for severance pay, however, if they have a policy, it will be helpful with planning your budget.”
Get Ready for Your Next Career Opportunity
Finding your next job will take a combination of essentials including an updated resume, assistance from your network and a polished LinkedIn profile to land your next opportunity. Get the job search underway to finding the right job for you with these recommendations from LinkedIn career expert Blair Heitmann.
- Be First In Line. Heitmann said LinkedIn data shows you’re 4x more likely to hear back about a position if you apply in the first 10 minutes it is posted on the site. Set up Job Alerts now to notify you as soon as a job that fits your criteria is posted. Then, apply ASAP.
- Send a Signal to Recruiters. “You can signal you’re open to job opportunities using the Open to Work feature on LinkedIn, which can show just to recruiters or more broadly so that your community can help,” said Heitmann. “Those using the #OpenToWork Profile frame are on average 40% more likely to receive InMails from recruiters and 20% more likely to receive messages from the LinkedIn community.”
- Work Your Connections. If you see a job you’re interested in and notice one of your connections works for this company, reach out to your connection and see if they can make an introduction or get your application to the top of the pile.
In addition, Heitmann said it’s a good idea to know what you want in your job, especially where you want to work. Job seekers on LinkedIn may use search filters like Hybrid and Remote Filters to find jobs that match their needs.
Increase Income Streams
“If you haven’t done so already, pick up a side hustle that brings in extra income,” said Alexander. “You want to make sure that you have another source of income in case something happens with your primary income source.”
Layoffs are stressful and overwhelming situations, but having an exit strategy in place can do wonders for providing peace of mind moving forward. Career coach Ken Coleman advises people to approach their jobs like a flight attendant advises passengers: be ready in the event of an emergency and have a plan.
“Be humble and hungry,” said Coleman. “Take a breath and look at your situation as an opportunity.”
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