Prepare for a Layoff
by Jon Flaherty
Maybe you saw it written on the wall. Or, maybe you felt blindsided by the news. The fact is, job layoffs happen. If you’ve ever lived through a layoff, then you know it can be challenging both emotionally and financially. The good news is that you can take steps now to lessen the impact a layoff could have on you and your family.
One of the most critical steps you can take to mitigate the risks associated with a layoff is ensuring you have an adequate emergency fund. The general rule of thumb is to have enough savings put aside that could cover your monthly lifestyle costs for three to six months. As that can be a wide target to aim for, you may be wondering how you decide whether to be on the lower or upper end of that range.
A few things to keep in mind when it comes to your emergency fund would be whether you live in a household with multiple income streams. In this case, you may be ok with a smaller emergency fund as you could potentially scrape by on one income until both spouses are back on their feet again. Or it may be that only one spouse works but you have a passive income source like a rental property. Either way, the secondary income should cover a portion of your general lifestyle expenses and means that your emergency fund would not be depleted as rapidly allowing you to be comfortable with perhaps only three or four months of lifestyle expenses saved as an emergency fund.
Another item to consider is the industry in which you are employed. Are jobs plentiful and easy to come by or are you in a much more specialized role? If your talents are easily transferable to another job or career, then you could get by on a smaller emergency fund as the downtime shouldn’t be as extended. Just keep in mind that the job demand in your area may change over time, and that you should revisit your emergency fund savings to ensure it is still adequate over time.
If the job search could prove to be more difficult, then you may want to have five or six months of savings that will allow you time to find your next role. Besides providing you with funds to draw on, the knowledge that you have savings can give you the confidence to pass up an offer if it isn’t your next dream job. The last thing you’d want is to go from a layoff to a job that isn’t fulfilling. By preparing now, you could use a layoff as an opportunity to transition into a new career or job that is meaningful to you.
A second step to take is keeping your LinkedIn profile updated. Check in from time to time to keep expanding your network, and potentially keep in contact with references you would tap while going through an interview process. At the same time, you can keep apprised of new innovations or thoughts within your field by subscribing to specialized newsfeeds within your industry. Not only will the knowledge benefit you in your current role, but it may help give you the edge when it comes to landing your next position.
A third step to take is to keep an eye on how your company and industry are trending. Does the company seem financially healthy? Have others been laid off in the past? Is the demand for your product growing or deteriorating? Are there any new law changes that will affect the profitability of your industry? By answering these questions, you’ll have a deeper sense of your overall job security that could help determine when or if a job layoff may be coming.
If you’d like assistance in determining an appropriate emergency fund, where to keep it or how to build one, then speak with your relationship manager today.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendation for any individual. All data and information is gathered from accurate sources but is not warranted to be correct, complete or accurate.