Broker Check

Planning for the Unexpected: The Loss of a Job

| September 12, 2018
Share |

Nobody likes thinking about the chance that they may lose their job. Whether it’s the result of downsizing, a financial crash, an incompatible job environment, or even a disability, sometimes our jobs aren’t as steady as we’d like them to be. With the financial crash of 2008 only ten years behind us, it’s important to recognize that, sometimes, we aren’t in control of everything.

However, with a little planning, we can be prepared should an unexpected job loss come to pass.

Six ways to prepare for a job loss

It’s our job -- and our industry’s job -- to plan for the worst, but we also want to empower you to really take care of yourself. That’s why we’re talking about how to plan for the loss of a job, even if you never actually lose it. In this week’s video, we discuss six of our best tips to prepare yourself for an unexpected job loss.

It’s our hope that, by implementing these tips in your life, you’ll be able to thrive even if your current job ends abruptly.

1. Build a savings buffer.

The first thing you can do to make yourself “unemployment-proof” is to build your emergency savings. Depending on your exact income needs and family size, you should save anywhere from 3 to 12 months of your expenses -- not just your income. In some cases, our expenses exceed our income, which means you’ll have to address your lifestyle or pay down consumer debt as you move forward with your savings goals. This way, you won’t be scrambling if you get a pink slip.

As a general rule of thumb, you can save 3-6 months’ worth of income and expenses if you’re single and 6-12 months’ worth if you have a family.

2. Get disability insurance.

Did you know that 1 in 8 workers will be disabled for five years or more during their lifetime? With numbers like that, it’s easy to see why we recommend signing up for your employer’s disability insurance. If you lose your job because of a disability or long-term illness, you can access this benefit to help you and your family while you’re out of work. All you have to do is sign up for it; it can be fairly inexpensive and it’s definitely worth it.

If you find yourself in a place where you can’t work due to disability, you can start drawing on this disability benefit to save yourself a ton of stress.

3. Start a side hustle.

Who doesn’t love a good side hustle? A side hustle can honestly be anything, from selling your crocheted beanies online to mowing lawns on weekends. Consider monetizing a hobby or doing something that gets you a little closer to your overall savings goals. These things can help you diversify your income and give you a safety net in case you find yourself without a regular job.

4. Work on your talent stack.

Want to make it difficult for your boss to let you go? Always be working to increase your knowledge and understanding of your job, industry, or organization. Learn new skills as much as possible and make yourself indispensable. If it comes time to downsize, you’ll be more likely to be one of the people the “higher-ups” can’t stand to lose.

5. Get rid of debt.

Having high-interest debt can make a job loss devastating. If you have all your cash going towards debt repayment, you don’t have much flexibility and the stress of job loss may be even more overwhelming. To counteract this, try to pay down your highest interest consumer debt (like credit cards or personal loans) while you can. Keep in mind that not all debt is bad; mortgages and some investments can actually help you in times of crisis.

If you’re not sure which debt you should be working to pay down, contact our Certified Financial Planner.

6. Stay humble.

Nothing is more humbling than losing your job. Being on the job hunt for longer than anticipated can also be a blow to the ego. But don’t get caught up in thinking that you have to find a better or higher paying job than the one you just left; sometimes, a job is a job. Don’t think you’re too good to wait tables, serve coffee, mow lawns… Sometimes, you have to be humble enough to accept a job that brings in any income to help you take care of yourself and/or your family.

Of course, once the tides have turned and more opportunities are available to you, you can move onwards and upwards. But don’t wait to accept a job because it’s not “ideal.”

Unemployment-proof your finances

If you lost your job tomorrow, would you have enough to pay the bills? Almost 80% of Americans live paycheck to paycheck, but we want to change those numbers. That’s why we’re here to help you create a plan that prepares you for the unexpected while also helping you live your best life.

We created our Vision Worksheet to help you put everything into perspective so that you have everything in place should you or your partner lose a job. It also provides a roadmap to your overall life goals, so make sure to check it out.

If you’re wondering how to plan for unexpected job loss, we can help. Reach us at [email protected] to discuss our life planning services.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

Share |