What to Do When You Get Laid Off and Tips to Manage Your Finances
- Feb 23, 2025
- 5 min read
Written by Andreas Jones, Financial Coach
Andreas Jones is well-known when it comes to Personal Finance and Frugal Lifestyle. He is the founder of KindaFrugal.com, an online blog and learning platform, the author of the book Financial Dignity, published in 2025, and the owner of the Well and Wealthy newsletter.
With the recent layoffs in the public and private sectors, there is a lot of financial anxiety. Losing your job can be tough and scary, making you unsure about what's next. It's important to manage your money well during this time. By checking your finances, improving your job search, and budgeting smartly, you can lessen the blow of being out of work.
A 2019 survey found that 90% of adults think having their finances in order makes them happier and more confident. Yet, a Bankrate.com survey showed that 60% of people don't have enough savings for a $1,000 emergency. The average cost of an emergency in 2019 was $3,500 for those who faced one. This shows how vital financial planning and budgeting are after a layoff.
While cutting your budget is a good move, don't forget to invest in yourself too. Working with a job search strategist can speed up finding your next job. Also, understanding the good and bad of severance agreements can protect you. Plus, applying for unemployment benefits early is key, as most claims are processed in 21 to 28 days.
Remember, managing your finances well is key to staying stable and reducing stress after a layoff. By checking your finances, improving your job search, and managing your spending, you can get through this tough time and come out stronger.
Assessing your financial situation post-layoff
Getting laid off can be tough and stressful, mainly when it comes to money. It's key to step back and look at your finances to get through this. Knowing your cash flow, emergency savings, and help options can help you plan.
Taking stock of your savings and assets
First, check your emergency savings and other money you have. If you have an emergency fund, use it for basic needs while you look for a new job. Severance packages and unemployment benefits can also help temporarily.
If you have a 401(k) from your old job, think about your choices. Taking money out of your 401(k) means a 20% tax and maybe a 10% penalty. Or, you might roll it over into an IRA or your new job's plan when you get hired.
Analyzing your essential and discretionary expenses
Make a detailed list of your monthly costs, splitting them into needs and wants. Needs are things like:
Rent or mortgage payments
Utilities
Food and groceries
Transportation costs
Healthcare and insurance premiums
Compare what you earn (from severance, benefits, and other sources) to what you spend. If you spend more than you earn, cut back on wants and look for other ways to make money.
Considering alternative income sources and financial assistance
While you're job hunting, think about other ways to make money. Freelancing, consulting, or temporary jobs can help until you find a steady job.
If you need help, look into financial aid programs. Check out unemployment insurance in your state and see if you qualify. You might also be able to keep your old job's health insurance under COBRA, but it's expensive.
Looking at your finances after a layoff is a big step in dealing with job loss. By understanding your money, cutting costs, and looking into other income and aid, you can plan your way through this tough time.
Optimizing your job search strategy
After a layoff, it's key to be proactive in your job search. Use effective strategies to find jobs faster. Start by updating your resume and LinkedIn profile to highlight your skills and experience.
Updating your resume and LinkedIn profile
Make your resume better by adding keywords that match your job goals. This helps your resume get past ATS and catch hiring managers' eyes. Also, keep your LinkedIn profile current and set it to "open to work" to show you're ready for new jobs.
Networking with former colleagues and industry professionals
Use your network to find jobs that aren't advertised. Contact old colleagues, peers, and mentors about your job search. Go to industry events, join online groups, and do informational interviews to grow your network and learn about job openings.
Preparing for interviews and salary negotiations
When you get job interviews, prepare well. Practice answering common questions and learn about the company. This shows you're interested and a good fit. For salary talks, know the market rates for your job. Be ready to talk about your salary with confidence. Show how your skills and experience make you valuable. By using these strategies, improving your resume and LinkedIn, networking, and preparing for interviews and salary talks, you can do well in the job market after a layoff. You'll have a better chance of finding a good job.
Managing your finances during unemployment
Losing your job can be stressful and overwhelming. But there are steps to manage your finances during this tough time. First, apply for unemployment benefits as soon as you can. Each state has its own rules and benefits, so check yours.
The CARES Act offers one-time stimulus checks. These are for people with incomes up to $75,000 (single), $150,000 (joint), or $112,500 (heads of household).
Next, look into your health insurance options. If your spouse or parent has insurance, you might be able to join. Or, you can get COBRA coverage or buy a plan through the ACA Marketplace. Keeping health insurance is key to avoid big medical bills.
Creating a budget is vital. List your must-haves like rent, utilities, and groceries. Then, cut back on non-essential spending. Use a budget app or spreadsheet to track your spending. If you have good credit, a 0% APR credit card might help, but pay it off before the intro period ends.
Financial stress can harm your mental and physical health. So, take care of yourself. Talk to family and friends, and seek help if you're feeling down. By managing your finances and taking care of yourself, you can get through this tough time stronger.
Read more from Andreas Jones
Andreas Jones, Financial Coach
Andreas Jones is well-known when it comes to Personal Finance and Frugal Lifestyle. After struggling with debt and financial shame, Andreas created strategies to dramatically improve his financial well-being. He has since dedicated his life to helping others achieve financial independence while enjoying life today. He is the founder of KindaFrugal.com, the premiere blog and digital learning academy with students in 195 countries. His mission: everyone experiences Financial Dignity.
