How to Prepare for a Layoff

Get Organized

businesswoman seated at conference table in office — Thomas Barwick/Iconica/Getty Images

You can't assess what a layoff will do to your financial situation if you don’t know what your financial situation is, so now's the time to conduct a thorough review of your finances and get them in order by setting financial goals, tracking your spending, creating a budget, and determining your net worth.

Start an Emergency Fund

If you've been meaning to set aside three to six months living expenses, but still haven't gotten around to it, now's the time to play catch up. Open a money market account or a high-yield savings account, and get that emergency fund going post haste.

Cut Your Spending

Find ways to spend less on necessary purchases and delay all unnecessary purchases until you feel the layoff risk has passed:

Create a Bare-Bones Budget

Make a list of your necessary expenses, and total them to determine how much money you really need to survive.

Get Rid of High Interest Debt

Transfer high-interest credit card debt to a low-interest card to minimize your debt burden. Then, form a plan to zap it as quickly as possible:

How to Get Rid of Credit Card Debt

Stockpile

Stock up on sale-priced food and toiletries now, and you'll have plenty to fall back on later:

What to Include in Your Stockpile

Consider Your Health Insurance Options

If your family's health insurance is attached to your job, you should start exploring your options now. Is your spouse eligible for coverage through his/her employer? Do you belong to any organizations that entitle you to coverage? How much would a private policy cost? What about COBRA? Does your state have a plan that you'd be eligible for?

Find Ways to Bring in Extra Money

You can never have too much money in the bank – bad times or not. So, do what you can to speed up your savings efforts – sell off your clutter; take on a part-time job; pick up a paper route. It all adds up to extra piece of mind:

Start Doing More for Yourself

Paying someone else to mow your lawn or change your oil may seem worth the cost when you have the money to cover it; but when times are tight, they should be some of the first expenses to go. Do more for yourself, and save more for yourself:

Plan for a Career Change

Don’t wait for disaster to strike before you start looking for a new job. Update your resume; develop new skills; reach out to friends and colleagues in your network; and apply for any job that interests you.

Know What You're Entitled to

Will you get a severance package? Will you be paid for unused vacation time? Will you be eligible for unemployment checks? How much will they be, and how long will they last? Research the answers to these questions now, and you'll know exactly what you're entitled to should a layoff occur.