First Person: Preparing Financially for a Layoff

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I was talking to a family member recently, and she mentioned that her place of employment has run out of work. She's been called and told not to come into work six out of her last seven scheduled work days. While she loves the time off, she realizes that it is impacting her finances, and it's very likely that she will be laid off in the near future.

Since she has a feeling that her layoff is pending, I told her that there are a few things she needs to do now while she is still working.

Stop Spending Money

The biggest piece of advice I gave her and her husband was to stop spending money and get back to basic necessities right now before she loses her job. They just went on vacation and just built a deck. My advice to them was to stop all those outdoor projects and stop the miscellaneous spending and going out to eat. I advised them that they might also think about parking their truck more often and driving their other more fuel efficient cars. She agreed with me.

They've also done some great things that will save them money in both the short and long term. They just built a deck and bought a new grill and outdoor patio set. That's going to save them money in both the long and short term. By spending more time outside, they will need less electricity to run their air conditioning and less electricity to run their stove because they plan to do most of their cooking outside on the grill.

They've also planted a garden containing tomatoes, cabbage, green beans and peppers as well as a herb garden. Here in a few weeks, they won't need to buy vegetables or herbs. They will be able to get both from their own garden.

Save As Much As Possible

With the money that they are not spending, I advised them to put it into a savings account in case it takes her longer to find a job than she has available unemployment. When I lost my job in 2009, I was able to find two temporary positions while I was unemployed and one part time job that did not pan out. I needed every ounce of savings to keep myself afloat after my unemployment benefits ran out in November 2011.

I have since started my own business, but every month is still a struggle to find the last $200 to pay my rent. I don't want them to fall into that same trap where they are scrounging together every penny to make their rent.

Start Looking For Other Work Now

Back in 2008, it took me an average of two months to find a new job and start that job. By 2009, I needed three months to find, apply, interview and accept a new temporary position. By 2010, I needed four months to find a job, apply, interview and start the temporary position. My last temporary position was as a phone operator for a small nursing staffing agency. I had applied for the job in March. They called me for an interview in May. I accepted the position in June and started after July 4th. The job took four months to secure and was only good for three weeks.

I advised my relative to start looking for work right now before she becomes unemployed. The sooner she starts applying for jobs, the sooner she can interview and accept a position, and she will need every ounce of time she has to figure out how to get her next job.

Consider Alternate Income Opportunities

I also advised her to start looking for alternative income opportunities such as administrative work from home opportunities or selling items she makes. She's thinking about starting her own computer repair business which I think is a fine idea.

The reason I want her to start looking for alternative income opportunities is because she may not be able to find a job before her unemployment benefits run out. I want her to have something to fall back on in case she cannot find another full-time permanent position quickly.

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