Broker Check
Laid Off? 5 Tips to Manage Your Money

Laid Off? 5 Tips to Manage Your Money

| February 20, 2023

Losing one’s job can be incredibly traumatic and destabilizing. It might make you question your identity and future. You may even wonder if you’ll still be able to provide for your family. Being laid off can be life-altering and can result in feelings of anxiety, sadness, and confusion.

The good news is that there are tried-and-true methods that can help you manage your finances during this uncertain time. And meeting with a financial advisor can shed light on which money management moves are best for your situation. Keep reading to learn more.

5 Smart Money Management Moves After Job Loss

Significant financial changes typically accompany the loss of a job. If you’ve been unexpectedly affected by a mass layoff, or even if you knew it was coming, it’s a good idea to schedule an appointment with your financial advisor so together you can come up with a plan of action to prepare for the future. You might discuss taking some of these steps:

  1. Negotiating your severance package – Not everyone receives a severance package, but if you do, contact HR to discuss its terms. If you believe you’re entitled to a larger payment than is being offered, request more. Some people also choose to involve an employment lawyer for additional leverage and insight.
  2. Applying for unemployment benefits – Unemployment insurance can supplement your savings while you search for a new job. Every state operates its own program, and it can take weeks for your application to be approved, so don’t wait around to apply if you choose to do so. Eligibility requirements, benefits provided, and the amount of time they are offered vary by state.
  3. Reviewing and updating your insurance – One’s insurance benefits typically end when they are laid off. It might be possible to qualify for the Consolidated Omnibus Budget Reconciliation Act (COBRA) to continue receiving your current healthcare coverage for a limited time (usually 36 months) if you pay a premium and administrative fee. Alternatively, you might consider enrolling for coverage under the Affordable Care Act (ACA) or moving to your spouse’s plan.
  4. Evaluating your 401(k) options – There are several ways to handle your 401(k) when you leave a company. You can potentially leave the funds where they are, roll them into an IRA or to a new employer, or cash them out. There can be significant tax implications with some of these options, so it’s crucial to consult with a tax professional before making any changes.
  5. Creating a budget and sticking to it – One of the scariest things about losing a job is suddenly having to go without a steady income. As you dip into your emergency savings or rely on another source of income, it’s wise to review your expenses and rein them in wherever possible. In addition, make a budget if you don’t already have one and strive to adhere to it.

Takeaway: Managing Your Finances Can Make Losing a Job Less Stressful

While it’s never easy to get laid off, fortunately there are steps one can take to alleviate some of the financial stress. Moreover, while navigating this potentially unfamiliar territory, the guidance of financial and tax advisors can prove invaluable. So if you find yourself in this situation, don’t despair; with financial planning and the right money management moves, you’ll be well on your way to a new job and a bright financial future.