How to Handle Job Loss
Unplanned financial hardship can be a difficult hurdle to jump. When you’re carrying family, debt, and financial responsibilities, it’s hard to pile on an unexpected financial catastrophe.
There are many examples of big monetary hardships, and one of those is experiencing job loss. Whether you get fired, you decide you need to quit your job unexpectedly, or your company experiences its own hardship and you go down with it, it’s a hard situation to get through if you’re not prepared for it. This can, unfortunately, happen to anyone at anytime regardless of job experience or financial standing, so it’s important to have a contingency plan in place. Otherwise, you may push yourself into further debt at a time when you don’t have money coming in.
Navigating job loss isn’t just about having money saved and making sure you’re an asset that companies want to hire, it’s also about living within your means and getting through the emotional aspect of losing your job.
The first step in handling your finances after a job loss is to start planning before it happens. Start by adding an emergency fund into your budget and contribute to it every month. It’s a good idea to save the amount equal to 2-3 months of living expenses. That way, if you do experience an unplanned gap in employment, you have a few months to look for another job without having to get behind on bills, rely on credit cards, or seek out a potentially dangerous short-term loan. Now is not the time to let your credit slip, as some potential employers look into your credit history to determine your employability.
Not only should you consider how to pay your bills when you don’t have money coming in, you should also look into your benefits packages when you lose your job. What happens to your 401(k)? What should you do about insurance? Do you qualify for unemployment benefits? Do you get paid out for your unused PTO? These are all questions you can ask your HR department before you leave. If you are eligible for unemployment or you will receive a PTO check (or perhaps even a severance package), that will really help your finances while in between jobs.
Molding Yourself into Your Biggest Asset
Your career is one of your most important financial assets, but the terms of that asset start with you. Start a new resume and list the new things you’ve learned at your most recent job, the skills you already had that you improved on, and look through your resume for any holes. Is there something you could improve on?
Fill your unemployed time searching for a job and improving your skills. Do this by volunteering, taking a class, and networking with other professionals in your field. You are your biggest financial asset and it’s up to you to transfer your skillset into a career that is both fulfilling and able to keep your finances in a comfortable place. Take this time to assess yourself and your skills, both transferable and technical. Take note of your skills, where you can put them to use, and where you should be improving.
Getting Through The Loss
Getting through job loss involves a big change in your day-to-day. You’ll need to plan out and organize your day while you’re unemployed instead of allowing yourself to get too comfortable (or potentially depressed) without a job.
- Wake up at a reasonable time. Shower, have coffee, get dressed, etc.
- Make a schedule. Apply for unemployment, work on your resume, look for a job, etc.
- Create a new budget. Plan for at least 3 months without your previous income, and consider what changes you should make to live more frugally. Will you need to consider looking into a loan, or reaching out to family?
- Take time to improve skills or desirability. Take a typing class, volunteer, do a job shadow.
- Call about your current bills, and see if they can work with you about payment. Explain your situation. Some companies are really lenient if you have been consistent about your payments and your credit history is in good shape.
Job loss is hard, but make sure you’re being proactive every day. Don’t look for a job in your sweats; shower, and get ready for your day. It’s a small thing, but it helps to keep your routine in a productive place. Get your finances in order, make a plan, and look towards the future.
Understanding the Emotional Side of Job Loss
Job loss is extremely stressful, especially if it’s unplanned. You’ve lost your most consistent form of income, your retirement is on hold, your bills are piling up, and you’re in employment limbo. Not knowing when you’ll find another job feels like you’ve lost control, and it’s natural to see a snowball-effect when imagining what will happen if you can’t find a job soon. Will you lose your home? Will you have to file bankruptcy? What if another financial emergency happens when you don’t have a job? There are so many variables and everyone’s situation is different, but it’s completely natural to feel depressed when you’ve lost your job.
Remember to focus on self-care in the process of finding a job. Take a few days away from the job search and resume building — just like you’d take a few days away from any job. Read a book, exercise, or cook more meals. These healthy activities will help you feel better and give you a mental reprieve from your search.
Stay focused on the future, surround yourself with positive people, and let yourself feel sad sometimes. The key is moving forward and being proactive. Find the happy medium between allowing yourself to sink into self-pity and pushing yourself to focus on the job search every minute of every day.
Handling job loss is about preparation and problem solving. Start an emergency savings account and continue to contribute to it just in case. One of the biggest stressors and long-term negative effects of job loss has to do with your finances. If you do experience job loss, begin planning immediately. Plan for the absence of a paycheck, make a plan for your benefits, and make a plan to mold yourself into an asset for your next employer. Job loss is a common financial hardship, but it’s one that can have many long-term effects. By planning ahead and being proactive about your job search, you can handle job loss a lot easier than you would otherwise.
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Chelsy is a writer from Montana who now lives in Boise, Idaho. She graduated with her journalism degree from the University of Montana in 2012. She enjoys talk radio, cold coffee, and playing Frisbee with her dog, Titan. Follow Chelsy on Twitter @Chelsy5
This post was updated June 25, 2017. It was originally published June 29, 2017.