How to Prepare for Unemployment While Employed
12 Tips to Help You Prepare for Unemployment
If you’re reading this, congratulations. You’re probably still employed. That means that you have time to put your financial, social, and work affairs in order in case your employment status changes.
You can prepare for unemployment while still employed. In fact, there is no better time to prepare for unemployment than while you're still employed.
While you can’t redo the decisions you’ve made over the past two to 10 years, you can make decisions now that will limit your exposure if your current employment ends.
And, end it might. In the current economic climate, with the threat and reality of increased governmental regulation; the current Covid-19 crisis, the threats of increased employer costs via prescribed health care and government interference in the employer-employee relationship in areas such as mandatory benefits; and general uncertainty about sales and profitability, employers are still shedding jobs.
Most importantly, if you are unemployed, or potentially unemployed, it is important for you to know that, in self-defense, employers are creating fewer jobs and some jobs have disappeared forever. It will impact the length of time you are unemployed and highlights the importance of the need to be prepared for unemployment.
How Do You Know to Get Ready for Unemployment
How will you know if the unemployment ax will fall? There are signs and symptoms for which you need to watch. Employees in some positions, such as finance or sales, usually have a better picture of their company's health.
Some companies aim for communication and result transparency, and all employees know when they need to prepare for unemployment. Whichever the case in your organization, this is how to know when and if unemployment looms for you. Are you in danger of getting fired or laid off?
12 Tips To Prepare for Unemployment
Given this economic climate, your unemployment, whether expected or hitting you out of the clear blue, may last awhile. With this possibility in mind, what can you do now to preserve and protect your family and your lifestyle should you find yourself suddenly unemployed?
Unemployment Tip: Save Money
Recognizing that this is easy to say, your best strategy to meet unemployment is to have money in the bank. By some figures, the average person who loses their job has less than a couple of weeks of savings in the bank.
According to the Pew Research Center, "In addition to being among the hardest hit by the economic fallout from COVID-19, lower-income adults are less prepared to withstand a financial shock than those with higher incomes. Only about one-in-four (23%) say they have rainy day funds set aside that would cover their expenses for three months in case of an emergency such as job loss, sickness, or an economic downturn, compared with 48% of middle-income and 75% of upper-income adults. And while 53% of lower-income adults say they will have trouble paying some of their bills this month, about a quarter of middle-income adults and 11% of those in the upper-income tier say the same."
Unemployment Tip: Delay Major Purchases
If you have any inkling that you may lose your job, or even if you don’t, now is the time to delay major purchases which are unnecessary. An unemployed friend’s refrigerator bit the dust recently, and she had to replace it, but she economized by eliminating “nice to’s” such as the ice maker.
When stores are offering options such as payment plans and layaway (remember layaway?), run, don’t walk in the opposite direction. On television, for example, furniture stores are offering to delay interest payments for four years. Resist these siren calls of “buy now.” Despite the fact that your purchases will aid the economy, you need to prepare for unemployment. Major sales of consumer goods can herald a poor economy.
Unemployment Tip: Live on One Salary
For a family in which two or more members are employed, consider trying to live on one salary to build savings, eliminate debt, and prepare for the potential consequences of unemployment.
Unemployment Tip: Use Credit Cards for Emergencies Only
Unless the item is essential, and you’d be surprised how few items are actually essential, control the urge to purchase it using a credit card. The purchase price always comes due, and the interest adds up to more than you ever imagine. Credit is the main factor in families living too close to the edge in the event of unexpected unemployment.
According to LaToya Irby, Credit Expert for The Balance, if you become unemployed while carrying significant credit card debt, this is what to do. "If at all possible, try to salvage your account and protect your credit. If you can't afford your credit card payments, consider contacting a consumer credit counseling agency that can help you explore your options. Your credit card statements include the number of a credit counseling agency."
Unemployment Tip: Stay Prepared to Job Search
Your resume and references should always remain up-to-date. You never know when you’ll need them and you don’t want to spend the first potentially productive days of your unemployment updating application materials and contacting references.
Likewise, maintain your network of contacts while you are employed. Stay active in professional associations so you’ll be the first to know of job openings and receive leads via word-of-mouth.
Prior to unemployment is also the time to build your professional presence on social networking sites such as LinkedIn, Facebook, and Twitter. It can take time to build an effective brand online and to do the networking necessary to expand contacts.
Prepare for potential unemployment with current job search materials and online and offline networks of contacts. Here are additional ideas about staying marketable while you are employed–before the dreaded unemployment event occurs.
Unemployment Tip: Create Mobility Options
While many are tied down with homes, family, social commitments, a partner’s job, and more, in the event of unemployment, flexibility and mobility may make the difference between staying unemployed and finding a new position.
Prepare for unemployment by maintaining as much flexibility and mobility as possible, if only by charting out “what if” scenarios as opposed to “we can’t” scenarios when discussing your future with your family.
Unemployment Tip: Consider Further Education
Are you just a few credits short of a degree? Maybe that professional certificate or designation would make you more employable than your competition. Working on your Master’s degree sounds proactive and says something about your willingness to stretch, grow, continue learning, and develop further knowledge and skills. In the event of unemployment, education may give you an edge.
Unemployment Tip: Broaden Your Skills
As you prepare for unemployment, consider the possibility that a job may not be available in the field or occupation of your choice. To prepare for such a contingency, you can broaden your skills and references by using a bit of spare time to volunteer, or better yet, work part-time in a different field.
In the case of a work colleague, her husband worked, in his spare time, as a garage gas boy to help out a friend and to gain access to a hoist to work on his collector car. This work means he now has sales skills he can use to move into part-time work after years of being a government employee, an area where there are no jobs in his high qualifications field. The colleague says, "It can be hard to develop cross skills when you work in cubicle land most of your life." But, her husband did, and it is serving them well in unemployment.
Unemployment Tip: Consider Starting Your Own Business
Another colleague and her husband have spent years combing garage and yard sales for finds. When her husband was laid off recently, it was a short leap to selling items on eBay and in a local antiques and collectibles shop. Should he find employment, he chose a shop that does not require his presence but is fee-based.
Another acquaintance, who had a long-term interest in a particular dog breed and was active in the local and national associations, capitalized on her interest, knowledge, and contacts.
She opened an online business that catered to the needs of other lovers of her breed with canine cookies, breed-specific key chains, and other novelty items, and resources for breed care and rescue. Advertising-supported, the site took advantage of her long-term hobby.
Take a look at your own hobbies, interests, talents, and skills. Perhaps a part-time business, that you can start while you are employed is your best insurance and preparation for unemployment. Small business owners possess some control over income and employment, and even a hobby, can help support you well into retirement.
Unemployment Tip: Get Along With Your Boss
Yes, the boss makes the final decision often, about who comes and goes. Use the advice in these articles to ensure your relationships with your boss and coworkers are positive and rewarding. It is not the time to job hop because you hate your current boss, no matter how bad your current boss is.
Unemployment Tip: Hang on to Your Current Job
Let's face the truth. Best liked, and valued employees are not the first to go to the unemployment line or website. You can learn from this colleague who shared her job security story.
"I was once in the situation where a huge number of co-workers got laid off, and I was one of the few left. It was horrible. But, in hindsight, I think they kept me because I could do every job in my department. I don't think any of my co-workers could have made the same claim.
"That was a gradual learning process, and it wasn't something I'd done on purpose with the goal of surviving a layoff. It was just me being me. When my co-workers went on vacation, I would offer to learn their jobs and keep things under control for them, so they didn't have to worry about anything while they were gone.
"So if the goal is to survive a layoff, I'd advise people to make themselves as indispensable as possible but to do so without making anyone feel threatened. Figure out ways to make life easier for your colleagues, your boss, and everyone else you come into contact with during the workday."
Unemployment Tip: 10 Steps to Keep Your Job in a Bad Economy
These ideas are featured as the last tip in this contingency list to prepare for unemployment because they take time and energy over time to execute. But, these ten steps will help you keep your job when the unemployment ax falls.
They are essential skills exhibited during a successful career. Contributing to your job, your customers, and your company in these ten ways will minimize the possibility that you’ll need to prepare for unemployment. After all, if you’ve done these ten things right, other employees are much more likely to experience a layoff before you.
These are fundamental skills in career success that will not just shelter you from a layoff; they will enhance and fuel the success of your current job and career.
The Bottom Line
These 12 tips should help you prepare your life and career for the eventuality of unemployment. You have the opportunity now to put your financial, social, and work affairs in order in case your employment status changes.
You can prepare for unemployment while still employed. In fact, there is no better time to prepare for unemployment than while you're still employed. Don't let yourself be a victim of "it can't happen here" thinking.
Pew Research Center. "About Half of Lower-Income Americans Report Household Job or Wage Loss Due to COVID-19." Accessed May 2, 2020.