Home > 2014 > Personal Finance

How to Prepare for a Possible Layoff

Advertiser Disclosure Comments 0 Comments

The economy is getting better, companies seem to be hiring, and people are generally more optimistic about the future. You feel secure in your job so you can forget your worries, right? Wrong! Now is the best time to prepare for a possible layoff.

If you wait until rumors swirl about your company’s financial hardship, bad economic news or another full-blown crisis, it could be too late. Preparing for the worst is much easier when things are going well. Here are some tips on how to prepare for a possible layoff right now.

1. Boost Your Knowledge

There are two ways you can prepare by learning. One is by increasing your financial literacy. Get educated on finances in general and your finances specifically. Many nonprofit organizations, schools and even banks offer free or low-cost workshops or classes. Some topics to consider include budgeting, investing, saving for retirement, homebuying, etc. Just beware of the sales pitch — you don’t have to work with these companies after the classes unless you want to. You can also utilize your local library for free access to books on personal finances. The more you know about financial planning, the better you can ensure your own financial future.

Also, think about taking some classes to increase your value and set yourself up for career advancement. Perhaps there is a professional certification or degree that could help you get to the next level. Research these options to see if they are a good fit for you.

2. Grow Your Funds

If you don’t have an emergency fund, start one now. Start with that $5 bill in your pocket or that extra $100 in your checking account. Or perhaps your tax refund can give you a good boost. If you already have an emergency fund, start bulking it up. Increase your contributions by an amount that you will barely notice in your daily budget — try between 1% and 5% of your paycheck. This will not only help you if you get a pink slip, but it can help you rest easier now. Knowing you are financially ready for the unexpected means you don’t have to panic.

There is much debate about how much you need to have in your emergency fund, but ultimately something is better than nothing. In general, three to six months may be enough to accumulate in an emergency fund. If you work in an industry with a lot of uncertainty or you don’t have a lot of flexibility in your monthly expenses (i.e. you already lead a pretty frugal lifestyle and won’t have a lot to cut back on in the event of a layoff), six to 12 months may be a better target. Figure out what number will make you feel comfortable and start working toward it.

Growing your emergency fund should happen alongside your other financial goals. Don’t stop contributing to your retirement plans — still make sure you get any company 401(k) match and set yourself up for a comfortable retirement. Just make sure you earmark some money out of every paycheck to build up your emergency fund also. It doesn’t have to happen all at once, but you should have a goal and a plan in mind.

3. Have a Backup Plan

This is sometimes referred to as a side hustle. It’s often a second job. Sometimes it’s a hobby that allows you to bring in some money. Look for part-time jobs that work around your full-time  one. If you are artsy or crafty, consider selling your work online, in stores or at craft fairs. The idea is to get a second source of income. The “extra” mony can be put toward your emergency fund.

Plus, if you lose your job, you will still have money coming in from your side gig. This can extend how long your emergency fund will last. It can buy you valuable time as you search for your next full-time job. In some instances, you may be able to ramp up work on your side job to full time.

4. Pay Attention to the Signs

Be aware of the climate at work. Stay alert for clues that the company isn’t doing well or may soon be downsizing. You don’t have to listen to every piece of gossip, but you don’t want to be the last to know when the layoffs are coming!

More Money-Saving Reads:

Image: Purestock

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Certain credit cards and other financial products mentioned in this and other articles on Credit.com News & Advice may also be offered through Credit.com product pages, and Credit.com will be compensated if our users apply for and ultimately sign up for any of these cards or products. However, this relationship does not result in any preferential editorial treatment.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Our Owners

Credit.com is owned by Progrexion Holdings Inc. which is the owner and administrator of a number of business related to credit and credit repair, including CreditRepair.com, and eFolks. In addition, Progrexion also provides services to Lexington Law Firm as a third party provider. Despite being owned by Progrexion, it is not the role of the Credit.com editorial team to advocate the use of the company’s other services. In articles, reporters may mention credit repair as an option, for example, but we’ll also be sure to note the various alternatives to that service. Furthermore, you may see ads for credit repair services on Credit.com, but the editorial team isn’t responsible for the creation or implementation of those ads, anymore than reporters for the New York Times or Washington Post are responsible for the ads on their sites.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team