Months of difficult economic news has translated into job losses for many people. For example, more than 91,000 tech workers were laid off during the last half of 2022, and other companies including big box retailers and financial institutions, are planning layoffs in 2023.
A layoff is never good news, but you can take steps to weather the storm. If you find yourself on the receiving end of a layoff announcement, take these five financial steps to manage the crisis.
Secure Health Insurance
If you have health insurance through your employer, you will need to figure out your options for continuing or replacing that coverage. Going without health coverage can lead to dire financial consequences if you end up with an illness or injury and the responsibility for paying high medical bills.
Check with your former employer to find out if you are eligible for COBRA benefits, which allow you to maintain your current health coverage at your own expense. If COBRA is not available or is too expensive, you can apply for government-subsidized health coverage through the online marketplace at Healthcare.gov.
If you had a health savings account (HSA) through your job, you’ll get to keep it even after the layoff. The funds in your HSA belong to you, not your employer, so you can use them to cover health-related expenses during your time between jobs.
Apply for Unemployment Benefits
If you were an employee in good standing, you have earned unemployment benefits. Sign up to start receiving those benefits as soon as possible. Laid-off workers often can receive unemployment benefits for 26 weeks, but the amount you receive and the length of time you’re covered will depend on your state’s policies. Check with the local office of your state’s Department of Labor and the unemployment office to find out the details and apply for benefits. You can probably apply online.
Cut Expenses
Look for ways to limit your nonessential spending while you’re without a regular paycheck. That might mean cutting out restaurant meals or streaming services.
If you think you’ll have difficulty covering your regular bills, consider contacting utility providers, mortgage lenders, credit card companies, and others to ask for payment plans or other relief. In many cases, creditors will be willing to work with you when you make a request.
Find Temporary Income
In addition to unemployment benefits, you may have some emergency savings that you can tap into, and you may get severance pay over a few weeks or months from your former employer. But if you’ll be unemployed for more than a month or two, it’s likely that you’ll have significantly less income than you did when you were earning a regular paycheck.
While you’re looking for a new job, find ways to replace some of your missing income with part-time or temporary work. For example, it can be easy to get started with gig work such as delivering groceries through Instacart or Shipt or driving for money with Uber or Lyft. Taking on side jobs or part-time work can be a temporary, but helpful, way to get you through a rough patch without piling up new debts.
Track Your Credit
If your period of unemployment lingers, you may need to turn to a personal loan, home equity loan, or credit cards to stay on top of your finances. It’s important to monitor your credit scores and reports, keeping track of any changes, so you can be prepared to use your credit when you need it.
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