What to Do if You've Been Laid Off

Don't panic! These expert strategies can help you keep your finances and your career on track after a layoff.

What to Do if You'Ve Been Laid Off

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Layoffs can be devastating emotionally—and financially. But if you've been impacted by layoffs, there are steps you can take to deal with the emotional impacts, fast track your way to (ideally) a better career opportunity, and minimize the financial damage. Check out the expert advice you need to take a layoff in stride.

Post-Layoff Career Tips

Take a breather first

You may feel like you should put your resume out there ASAP, but there's a benefit to dealing with what just happened. "Recently laid-off employees should take some time—a week or two—to process, work through their emotions, and recover from what likely felt like a traumatic event," says Kristen Zavo, career coach and author of Job Joy: Your Guide to Success, Meaning, and Happiness in Your Career. "Prioritizing mental and emotional well-being from the start will ensure a faster and more effective job search."

List out your accomplishments

Not only will this give you talking points to use for networking conversations and cover letters, but it'll also give you a big confidence boost. "Making a list of your accomplishments—including your non-career-related wins too—can be helpful in reminding yourself of your natural strengths, abilities, and resilience to weather any setback," Zavo says.

Reach out to your colleagues, friends, and family

Networking is one of the best ways to find your next career move—both by making a big social media announcement to your entire friends-and-family network (you may not know that your cousin's brother-in-law is at your dream company), and by targeted, individualized messages to past colleagues and mentors.

"I’ve seen success with both methods—and it doesn’t hurt to do both!" Zavo says. "But I’ve seen the most success with individual outreach. I recommend job seekers leverage their current network as well as connect with new people in their field of interest. A casual, informational interview-style conversation can go a long way in building relationships, practicing your story, and even learning about unlisted jobs."

Dream big about your future

Rather than immediately look for a similar opportunity (AKA any port in a storm), a layoff may give you the perfect opportunity to shift your career toward your dream role—or even toward starting a business of your own. "While a layoff can be devastating, it’s also an opportunity to re-evaluate, and if desired, pivot your career into a direction more suited to your needs and desires," Zavo says. "Job seekers can then position themselves accordingly and begin networking, researching, and applying to jobs that are more likely to be fulfilling in the long run."

Don't spend too much time on cold applications

"The biggest mistake I see job seekers making is relying solely or mostly on job boards and online applications," Zavo says. "Many jobs are never listed, and the odds that an application will make it through to a human are less than 25 percent. That’s why it’s crucial to also network, to learn about jobs that are never posted, and to have a friend on the inside who can make sure your resume makes it to the top of the pile."

Be open to a rebound job

If your finances can't handle a long layoff, now may be the time to look for a "good enough" gig. "Any income coming in is going to help," says Isabel Barrow, director of financial planning at Edelman Financial Engines. "Taking a part-time job or gig work is a better idea than trying to focus only on the long-term goal of replacing your lost job. Remember that our economy will recover, the jobs will become available again, but you need to focus on your short-term cash flow needs."

Gig work has a few advantages that may make it an ideal gap-filler while you're waiting for a better job to come along. "Some gig work offers immediate pay," says Courtney Alev, consumer financial advocate at Credit Karma. "Another advantage to gig work is that the working hours are often more flexible. This can allow you to look for more permanent work while still having a source of income on the side."

Navigating Your Finances After a Layoff

The hardest part about a job loss is dealing with the financial aftermath—especially if your finances weren't picture-perfect before the layoff happened. But taking stock and taking action will minimize the impact of losing your job on your financial goals.

Get an accurate look at your financial picture

"Look at everything—your credit card bills, your rent or mortgage payment schedule, your car payment, daycare fees, utility bills, you name it," Alev says. "Ideally you’re getting a bird's-eye view of your finances so you can see what you need to spend on in the short term."

And don't forget to look at any income you will have coming in—whether it's a spouse's paycheck, your unemployment coverage, or a severance package. "You need to get a clear picture of what you have, and what you are eligible for through your employer," Barrow says. "Do you have a 401(k), and if so, should you roll it over into an IRA or a new employer's plan? Do you have stock options that you will need to liquidate?"

Experts typically recommend having emergency savings of at least three to six months of expenses to help you weather situations like these. But if you don't have that, you're not alone. "A recent Credit Karma survey found that 41 percent of Americans don’t have an emergency fund, more than one in five have no savings at all," Alev says.

If you don't have emergency funds, "your first and best option is to find a new income stream ASAP," Barrow says. "Work in a temporary or part-time fashion in any field while you look for work in your own field."

Consider your health care options

Your former employer may extend your benefits via COBRA (though in most cases, you would be paying the full cost of the coverage). If that's not an option, your job loss would likely make you eligible for an insurance policy through the Affordable Care Act coverage. You may want to price out both options—looking at what they cover vs. your typical healthcare needs, along with overall pricing—to see which health insurance option would be better for your individual circumstances.

Prioritize your spending—and cut back on things you don't need

Obviously, food, shelter, and your health are all non-negotiable, but you probably spend a fair amount of your income on things that may not be as essential. Look through your credit and debit card statements for things you can shave out of your budget, at least for the time being. Gamify it by looking for creative solutions (i.e. borrowing movies and books from the library vs. streaming service subscriptions), and rewarding yourself (in non-monetary ways) for your money-saving wins.

Talk to your loan servicers and credit card companies

If you think you may have trouble paying your mortgage, auto loan, or other debts, contact the companies as soon as possible to see what can be done. In some instances, they may be able to lower your credit card interest rate, or reduce the amount of your payments until you get back on your feet.

Take a hardship withdrawal from your retirement accounts as a last resort

If you're in a break-glass-for-emergency situation financially (i.e. no savings and your unemployment payments won't cover the rent), you may be able to withdraw some retirement savings to help you cover your expenses. But there are multiple reasons why this is a bad idea if you can possibly help it. Taking money out of your 401(k) or other retirement accounts early will mean that you lose out on future growth, along with having that money available for your retirement. You will have to pay taxes on a hardship withdrawal as well—though you may be able to avoid paying the 10 percent early withdrawal fee if you can prove that it's an "immediate and heavy need."

"The only instance where I think cashing out your retirement, or a portion of it makes sense, is if it is your last resort," Barrow says. "You have exhausted your cash, you are receiving all the unemployment benefits you can, you have cut expenses, you are generating as much interim income as you can, then a hardship withdrawal from the retirement accounts may be a better option that going to a credit card or other debt."

Consider spending that could lead to your next career move

If you live somewhere where job opportunities are scarce, or are in a field with limited career options, you might want to look into options that may make you more marketable, such as relocating or getting additional training. "Be realistic about what you will need to make a career change, if that is what you are considering," Barrow says. "Will it involve additional education, and if so, how will you pay for it? Should you consider moving to where more jobs in your field are readily available, and if so, what will the financial implications be?"

Don't forget that this is all temporary

It's going to feel overwhelming and scary in the moment, but remember that layoffs aren't forever—and that you are likely to have a new job within a few months. "Don’t let the layoff define you or derail your financial goals," Barrow says. "Remember that this is only temporary—our economy will recover, and the jobs will become available again."

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