5 Ways to Prepare for a Layoff

Stressed businessman
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With a downturn in the economy, it is not uncommon for many companies to begin laying off employees. Generally, companies begin laying off people who have been there the shortest time. Often, this means that people in their 20s are often the hardest hit demographic when it comes to layoffs.

You may want to look for warning signs, such as a decreasing client base, no annual raise, or not getting paid on time. Even when times are good you should be ready to handle a possible layoff. There are five specific ways to prepare for a layoff that is relatively easy and take only a few minutes a week.

Follow a Budget

When you are faced with a layoff it can devastate you financially if you are not prepared. It is important to make a commitment to follow a budget every month and make every effort to get out of debt. You should also carefully consider any loans that you take out, and what would happen if you were not able to pay them back.

If you were to lose your job and already have a budget, it is much easier to make changes to keep your finances under control while you look for a new job.

Take the time to write up a bare-bones budget, so you know what expenses will need to be cut in case of a layoff. You should prepare your finances for a recession, as well as hone your job skills.

Keep an Emergency Fund

It is also important to have an emergency fund on hand. This emergency fund should cover three to six months of your expenses. It takes most people between three to six months to find a job. Even if you do not have the entire amount saved when you lose your job, you will be able to make your severance and any other unemployment stretch much farther because you have saved that money. It will also help to protect any money that you have saved for retirement.

An emergency fund is just one step in disaster-proofing your finances. It is a safety net that can protect you financially from unexpected life events such as layoffs. When starting an emergency fund, you may want to save money before you pay off debt.

In the event of a layoff, prepare yourself emotionally. Being told that you are no longer needed at a company can be shocking and hurt your self esteem. Make sure to not take the decision personally, as it's a business decision likely based on the need to reduce expenses by cutting salaries. Take care of yourself by focusing on finding a new position that can give you additional experience to advance your career.

Advance Your Skills and Licensing

You should continually be looking to improve your skills and certifications. Take advantage of any additional training or certification offered at your company. You may receive the job over another candidate who has more years of experience but is lacking in the certifications or newer computer skills that your job requires. These additional credentials can also help land you a higher paying job in the future.

Build a Network

Additionally, it is important to continue to network at all times. As you build relationships with those at your company, as well as others in the industry, you will have contacts who can help you find a new job. Most job hires come as a result of network contacts. It may be that you hear about a job through a certain person, or you can use someone as an additional reference.

Keep a Positive Attitude

While you are at your company you should work with a positive attitude and give it your very best commitment. This may protect you from being laid off, and can also help you to receive good references when you are looking for a new job. It is important to do your best work at all times possible and build a good business reputation.

The Bottom Line

Take the lessons you are learning now and apply them to the way you handle money in the future. The lessons from a slow economy can help you be more successful financially if you continue to apply them during good economic times as well. Preparing a budget and following it now will help you prepare for a time when money may be tighter in the future.