The topic for today’s post is one that hits close to home for me. I am in the midst of preparing for a job loss, so in essence, I am writing these words to encourage myself. Preparing for a job loss is not the most pleasant thing in the world, but I consider myself blessed because I was given advance notice (over a year, hallelujah), which leaves me with lots of time to prepare. I’m grateful that my husband and I are debt-free, other than our mortgage. Being debt-free alleviates some of the pressure but we obviously still have expenses and 3 little people to care for, so preparation is important.
Complicating matters is the fact that I’m presently the primary earner for my family. Three years ago, my husband walked away a full-time salaried position as a senior pastor to plant a church in our hometown of Baltimore. This move fulfilled a dream and a calling. But it also stretched us financially and left us living off of one income for the past three years.
By nature, I am a glass-half-empty kind of girl. But I have been working on that. Maturity and personal growth have helped me to find the good even in a seemingly dismal situation. So, I have been surprisingly at peace with the impending job loss. Ramping up our debt-free efforts and pursuing financial freedom began at just the right time. Along the way, I’ve been working to create new streams of income and decrease my dependence on the paycheck that I receive from my full-time employer. It was all preparation for this journey.
In the midst of preparing financially for the job loss I have started to wonder… could this be the perfect time to start a small business?? I’m still fleshing out the details, but I think the answer is YES. More details on this in upcoming blog posts.
Ok, ok…before I veer too far off-topic, let me reign it back in.
7 Strategies to Prepare for a Job Loss
1. Create a bare-bones budget.
If your budget is like mine, then you have items in it that are ‘wants’ but not necessarily needs. Take some time to review your budget and focus on the expenses that are absolutely necessary to keep your household running. Dave Ramsey refers to these expenses as The Four Walls: Food, Shelter (including utilities), basic clothing, and transportation. Tally up the amount of these expenses and that will give you a good idea of what your bare-bones budget looks like. You might also include other expenses like internet and phone. Now is not the time to go off-grid because you’ll likely be networking, filling our applications, and sending out resumes to secure your next job. I’d recommend implementing this budget right away. If your job ends in 3 months, prepare yourself now by immediately implementing this reduced budget.
2. Trim the fat.
If you are preparing for a job loss discretionary spending some slow to a crawl. Now is not the time to indulge in weekly manicures and pedicures or custom haircuts and color at the salon. Any money remaining after maintaining your 4 walls should be saved up to cushion the blow from the loss of income that is coming. This leads me to my next point…
3. Build up your emergency fund.
You might not have any idea how long it will take to find a new job but shoot for the stars with this one. The amount that you aim for will depend on a number of things. If you are a two-income household, you may not need to be as aggressive because your spouse will still be employed. But if you are a single-income earner then this strategy is of paramount importance. If your goal is to save up a 3-month emergency fund then multiply the number that you came up with in tip #1 and multiply it by 3. That is your new savings goal but the more money you have socked away, the better.
Recommended Post: Emergency Fund 101- Why You Need One and How to Get Started
4. Pre-pay expenses ahead of time.
Another strategy that you could employ in addition to, or as an alternative to tip #3, is pre-pay your largest expense ahead of time. You could opt to pre-pay your rent or mortgage for the next couple of months to have the added security of knowing that your housing expenses are taken care of already. Some other strategies may be to pay up your car note, prepay for gas and/or grocery gift cards and set them aside for leaner times.
5. Get Your Side Hustle on.
In addition to saving every penny of discretionary money while you still have your full-time job, also begin to look for ways to earn money on the side. Do you have unused items in your house that you can sell? Consider selling them on eBay, Craig’s List, or at a consignment shop. Why not keep it simple and have a good, old-fashioned garage sale? Get creative with your side-hustles. Sit down and think about what gifts, talents, and skills that you possess that are marketable. Working as a teacher full-time? Maybe consider tutoring on the side to generate some extra cash to add to your emergency fund.
6. Look for alternative health care coverage.
This is an important one for me. With 3 little ones, I would never risk going without health insurance. Under federal law, you have the option of using COBRA which ensures the continuation of your health benefits. Unfortunately, COBRA is very expensive and you may find this option too expensive. I am currently shopping around for budget-friendly alternatives and may do a separate post about what I find.
7. Invest in yourself.
It may sound counter-intuitive but now may be a good time to invest in yourself and your future. You may need to take a course or workshop to brush up on your skills in order to make yourself more marketable. With a little bit of research online you may find that there are tons of free or inexpensive resources available online, through your local public library, or community college. If you’re interested in starting a blog, consider taking a writing course. You never know, your interest or hobby may be your next career path!
Have you ever dealt with a job loss? How did you prepare for it financially?