Worried about your job? Here’s how to plan a layoff

Federal workers’ experiences this year with layoffs and furloughs may seem extreme. But for anyone who works for a living, they’re a reminder that when you see signs your job might be in jeopardy, it’s helpful to make a financial plan.

US government employees laid off en masse during the first months of the Trump administration, and hundreds of thousands were recently furloughed without pay due to the government shutdown. Last Friday, Russell Vought, chief of the Office of Management and Budgetannounced a new round of massive layoffs. And in a court filing the same day, the government said additional agencies were working. considering letting even more people go.

Layoffs may be done differently elsewhere, but it’s up to employees everywhere to learn how to protect their finances.

How long you can support yourself between jobs depends on understanding your spending needs and the likely resources you will have available in the event of layoff.

Determine how much you spend each month and on what specifically. This is the key to understanding which expenses are essential and which are discretionary (and can be reduced if things get tough).

“Make sure the hierarchy of needs – food, shelter and healthcare – is covered. redefinition of priorities” said Stacy Miller, certified financial planner and CEO of Florida-based Bayview Financial Planning. This includes debt payments that must be paid in full and those that can be adjusted if (and only if) things get very tight.

For example, prioritize paying your mortgage over a credit card bill, Miller said. “Don’t let yourself be kicked out.”

If possible, try to pay the minimum amount due on your credit card each month so you don’t incur late fees, higher interest rates, and a lower credit score.

Alternatively, if you are able to repay some of your debts now, you will be relieved in the future. Choose a repayment strategy this will give you the most satisfaction. For example, Miller said, “Start with your highest rate debt or your highest digital debt. »

Emergency funds can reduce your stress.

The standard advice is to have between three and 12 months of living expenses in a high-yield savings account or other easily liquidated income-generating account.

If your emergency fund is small or nonexistent, try setting aside some savings every time you get paid. And if you work for an organization where layoffs seem very likely, you can pause your contributions to a workplace retirement plan for a few paychecks and redirect that money into an emergency savings account. (You can also check if your employer allows you to use your 401(k) for emergencies without any penalty.)

Also consider what other emergency funds might be accessible. For example, if you own your home, you could benefit from a home equity line of credit. But only touch it if things get critical.

Check what, if any, your employer’s severance policy is. Estimate how many weeks or months of pay you could receive and how many months your health benefits would be subsidized.

Next, estimate how much you could receive in unemployment benefits. Each state has its own formula, so check your state’s department of labor website to see what advice they offer and how long it might take to get your first check after you apply.

Also consider what other sources of income you will have, Miller said. Do you have income from rental property or dividends and interest from a brokerage account? Does your spouse earn money? Is there a second job you could get for some extra money if needed?

Seek outside help when developing a layoff plan if you’re unsure of the best options for your situation.

If you can’t afford to pay for this counseling, nonprofit organizations can help, Miller said. For example, Ladies SAVVY provides free financial education to women. And if you belong to unions or places of worship, these organizations can offer you free counseling and other assistance.

If you are fired, communicate your situation to your creditors and utility providers. They can make many adjustments to your bills to relieve some of your financial stress.

For federal workers and military members, there are a wide range of help resources. For example, many banks And credit unions offer various forms of financial assistance to furloughed workers – from fee waivers to 0% payday assistance loans.

Members of federal employee groups like the National Association of Active and Retired Federal Employees (NARFE) can offer information and assistance to laid-off workers, as can groups like Army emergency relief And Blue Star Families.

And as GovExec reported, federal workers themselves have been crowdsourcing resources on a spreadsheet.