Broker Check
Navigating Finances After a Layoff: A Comprehensive Guide

Navigating Finances After a Layoff: A Comprehensive Guide

March 14, 2024

Experiencing a layoff can be one of life's most challenging setbacks. Apart from the emotional toll, it can also bring financial uncertainty and stress. However, amidst the turbulence, there are strategies you can employ to regain control of your finances and navigate this difficult period with resilience and determination.

 

Assess Your Finances

Income Evaluation: Start by calculating your current sources of income. This includes any severance pay, unemployment benefits, savings, or income from side hustles or investments. Understanding how much you have coming in and how long it will last is essential for planning.

Expense Analysis: Review your monthly expenses meticulously. Identify essential expenses like rent/mortgage, utilities, groceries, and debt repayments. Differentiate these from non-essential expenses such as dining out or entertainment. Cutting down on non-essential expenses can significantly stretch your savings during this period.

Emergency Fund Check: If you have an emergency fund, evaluate its adequacy. It's recommended to have three to six months' worth of living expenses saved up. If your emergency fund is insufficient, consider ways to bolster it once you're back on your feet financially.

Debt Assessment: Take stock of your debts, including credit cards, loans, and mortgages. Evaluate your minimum monthly payments and interest rates. In times of financial uncertainty, it may be beneficial to contact creditors to discuss payment options or deferments.

Talk to Your Advisor: Your advisor is there to help you through all of life’s ups and downs. Tapping into their knowledge and the resources they have available might help you better assess your situation and find solutions.

 

Find Health Benefits

COBRA Coverage: The Consolidated Omnibus Budget Reconciliation Act (COBRA) allows you to continue your employer-sponsored health insurance for a limited time after a layoff. However, COBRA coverage can be expensive, as you'll be responsible for the full premium, including what your employer previously covered.

Health Insurance Marketplace: Explore options available through the Health Insurance Marketplace (Healthcare.gov) for affordable health insurance plans. Depending on your income level, you may qualify for subsidies or Medicaid coverage.

Spousal or Partner Coverage: If your spouse or partner has employer-sponsored health insurance, investigate the possibility of being added to their plan. This can often be a more cost-effective option than purchasing individual coverage.

 

Identify Areas for Change

Budget Revision: Adjust your budget according to your current financial situation. Look for areas where you can cut back on expenses. This might involve renegotiating subscriptions, canceling memberships, or finding more cost-effective alternatives for utilities and services.

Exploring Additional Income Streams: Consider taking up freelance work, consulting, or part-time employment to supplement your income. Websites like Upwork, Fiverr, or TaskRabbit offer opportunities for freelancers across various skill sets.

Reevaluating Long-Term Goals: A layoff can be an opportunity to reassess your long-term financial goals. Evaluate whether your current career path aligns with your aspirations and consider investing in upskilling or education to enhance your employability in the future.

 

This is a time of change and while you might not have expected it, this could be a good time to reevaluate not only your finances but your goals as well. Create a circle of support to help you through this time – and make sure your financial advisor is a part of it.