To know where to begin, it is important to bring all financial information out in the open to get a clear picture of your “financial health”. Inventory your current monthly bills. Write down balances, monthly payment information, creditor and due dates.
After making an inventory sheet, it is now time to plan ahead. Are any of your balances credit card accounts or student loans? In most cases, government-backed (not private) student loans can have a period of deferred payment during the life of the loan. Most of the time, this period is for six months, but check with your lender to understand your loan’s terms and conditions.
Credit cards, on the other hand do not have a deferment period. If monthly payments for all credit cards are a low amount, check to make sure the interest rate is fixed and not adjustable. If the balance on a credit card or two is high, there are ways to protect you. See if any of your credit cards offer an insurance policy that covers periods of unemployment resulting from a layoff. Often times this insurance is a little over $1.00 for every $100 charged, but for people with a high balance, those uncertain if they can afford monthly payments due to an unexpected job loss, or those whose employment situation is based on the stability of the market or other industries, the insurance may be a good buy. Know what the insurance covers before purchasing it. There may be a minimum waiting period, but in the meantime, you may want to transfer all of your balances onto cards with insurance. The insurance generally covers the minimum amount due.
Now that the insurance option has been presented, look into your “job insurance” at work. Part of this is to understand your contract. For people who have been working at a company for a long time or for those that did not review their contract in full, knowing the terms of a layoff or unexpected job loss will help you understand any severance, benefits, or other services entitled to you by your employer. Be sure to make a copy each year a new one is signed to keep on record.
Track your spending for a week buying groceries, gas, prescriptions and other necessary items. Multiply this times four to get an accurate picture of monthly income required. Additionally, list all necessary payments due each month. This is the bare minimum needed in income. Now add 10% to the amount to cover things like vehicle emergencies, medical co-payments, and job hunting related expenses.
Even if not immediately faced with the prospect of losing a job, get statements from co-workers. While you are still employed, have co-workers and supervisors write letters of recommendation. Since many prospective employers ask for a reference from a previous employer, try to get letters which can verify dates of employment, job duties and description, and personal character. A letter written on company letterhead with an alternative contact method for your supervisor works best incase your supervisor becomes laid off or the company closes.
Should the inevitable happen, be proactive rather than reactive. Think benefits, or lack of. When becoming laid off, there will be 401k plans, various insurances and other benefits currently enjoyed that will now become your responsibility. Some companies allow workers to cash out pension plans when they separate from a company. While this is your retirement, you may need this money to live on, especially if your company’s industry is in a sector with few vacancies.
As part of planning, keep all options open for the future. Part of that is training for a new career. As you become more aware that your industry is changing, consider training for a new career. Financial aid may be available at many colleges for students with less than a bachelor’s degree. Just because your income taxes reflect a high income amount does not mean schools can’t help you. In fact, many will take into consideration your new income or refer you to the state job office where vocational training is often paid for in full by government or private agencies.
Finally, think outside of the box. This may mean tailoring your resume to new industries with similar job roles. For example, if you are a laid-off auto worker, break your job down and apply it to various industries. Assemblers can apply to work at other non-auto assembly jobs or auto parts stores, painters at painting jobs/Home Depot, Lowe’s type of stores, auto electricians at bus/rv/marine industries. The keys to seeking new employment are diversifying, networking and tailoring your resume each time to a new position’s requirements.