One of the most stressful things a family can go through is an unexpected job loss. Even if your job’s future is uncertain, there are some ways to get ready emotionally and financially. Here are my best tips on how to prepare for job loss.
Take a Deep Breath
It’s going to be OKAY!
The only thing certain in life is uncertainty.
Even though an unexpected job loss is one of the most stressful things a person or family can go through, with the right planning, you can come out the other side even stronger than before.
How to Cut Expenses to Prepare for Job Loss
Stop all excess spending immediately. Really push yourself to consider cutting absolutely every expense you can.
Now is the time to really zero in on your budget and make some difficult decisions.
This includes cutting cable, entertainment subscriptions, clothing and personal care expenses…
Basically anything other than necessities.
DO NOT cancel life insurance policies or other insurances.
You should shop around for cheaper auto insurance policies, however. Use this as an opportunity to cut your costs as low as possible while still protecting your family and investment.
That would only put your family further into financial peril and that’s exactly what we’re trying to avoid.
Drop to a lower cell phone plan with less data.
What Bills to Pay After Job Loss
If losing your job is going to leave money so tight that you can’t afford to pay all of your bills, you have to pick and choose the most important ones.
This is the time to dip into savings, if you have it.
The things that get paid first are housing expenses and utilities.
This is also the time to adopt a college student diet, if your health can afford it for a short amount of time while you get back on your feet.
If any bill has to be paid late or not paid at all for a month or two – consider your credit cards and unsecured loans.
Federal student loans should still be paid, if possible, to avoid losing any income-based payment plan options now or in the future.
How to Create a Budget After Job Loss
Let’s think cheap!
I know this is probably the most stressful time in your life, but we need to work on cutting the anxiety so we can clearly think about the future and make a winning plan.
Think about it this way – you’re going to lose your job whether you stress about it or not.
Why not make a game out of becoming as frugal as possible and applying for as many jobs as you possibly can?
Dwelling on how unfair or poorly timed this job loss is will only make the situation worse on you and your family.
It’s important to write down each of your expenses so you can clearly assess your financial situation.
Look at how much you’ll need to make each month just to break even.
How many months of expenses do you currently have in savings?
If this period of unemployment goes on for any length of time, can you borrow from your 401k? Call and find out your options.
Look for things to cut from your budget while you are home full time.
Daycare is a prime example.
Daycare is one of the most expensive costs most families pay each month. If one parent is now going to be home full time, immediately take your children out of daycare so you can cross one large cost off your list.
Should You Tell Your Creditors That You’re Losing Your Job?
Now is the time to call each of your creditors and let them know about your situation.
Don’t wait until you can’t afford to pay your bill, tell them before you even lose your job – if that’s an option.
Now is the time to renegotiate your payments.
Some companies won’t work with you until you’ve fallen behind on payments, but after the most recent housing crisis, more companies are open to being proactive.
Even if one of your creditors won’t help you lower your payment or make other arrangements, just giving them a heads up that you may be falling behind can pay off down the road.
How to Find a Job After Getting Fired
When you first lose your job to a firing or a lay off, it can feel like you’ll be far less attractive to potential employers.
This isn’t necessarily the case.
The key to finding another job quickly is to pull your resources and network like you’ve never networked before.
Get on Linkedin and reach out to former colleagues, classmates, and friends. Let everyone know that you’ve recently lost your job (or may lose your job soon) and ask that everyone “keep their ears open” for you.
Research job fairs in your area. Consider going even if you’ve never worked in that field before.
Strive to meet a new contact every single day.
Your full time job now is securing a new full time job.
Be willing to make a career change to a different field for a while if necessary. It can be a big shake up to lose a job – but being picky about future employment will only hurt you further.
Your goal right now is to provide for yourself and your family. Consider taking a lower paying job if it provides some stability.
You may not be able to afford the quality of life you’ve grown used to, but that only provides a goal for you to strive to reach.
You got there once, you’ll get there again!
How to Prepare Your Kids for Job Loss
This is emotionally THE HARDEST PART of job loss for a family…telling the most innocent and unpredictable people in your lives.
If your kids are still too young to understand, you get off easy.
If your kids are old enough to recognize the big changes taking place, you should be honest with them about how they’ll be affected.
The most important thing to remember when talking to your kids about finances is to remain as upbeat and positive as possible.
Don’t pass your anxiety on to your kids.
Instead, address this as a temporary chapter in your family’s story and one that the family will work together to get through as quickly as possible.
Be sure to make sure your children feel as secure as possible.
Brace yourself for selfish concerns and address them as though they’re the most valid questions you’ve ever heard.
“Does this mean I can’t get that new skateboard?”
“Does this mean we won’t get to go that tournament?”
Try your best not to get annoyed by questions like these but instead understand that small concerns like these make up your child’s whole world at this age.
Questions like this are normal and healthy – be honest and your child will appreciate you for it later in life.
While it’s important to protect your children’s feelings, don’t sugarcoat the possible repercussions either.
If it looks like you may have to switch school districts, cancel the family vacation, or pull them out of sports, let them know it’s a possibility so they can start to adapt and address that disappointment now.
Throughout this process, catch your children doing something right, as Dr. Phil would say.
Each time your child doesn’t complain about not being able to watch their favorite show on cable anymore, tell them that you notice and appreciate their support.
This will build them up and encourage even more supportive behavior as we work through this.
How to Support Your Family After Job Loss
Research programs available to you now so you’ll be prepared when you actually need them.
There are insurance programs available for low income families. Check to see if you’ll qualify on your new income after you lose your job.
Will you be able to afford food while you’re unemployed?
If money will be so tight that you worry about feeding your family, consider looking into government programs.
They’re there to help through situations just like this.
Medicaid for insurance, food stamps and WIC programs are available for individuals and families who qualify.
How to Handle the Shame of Job Loss
Holy cow, have I been there.
I lost my job in 2009 during the housing market crisis as part of a company-wide lay off.
By the time all was said and done, around 40% of the company had been let go, if I remember correctly.
Even though I was one of literally millions of people losing their jobs at the time, I was still so ashamed of my situation.
I constantly wondered if there was something I could have done to make myself more valuable to the company to make them keep me on board.
This kind of thinking isn’t going to get you anywhere.
Positive thinking is what we need right now, so here is what I need you to do.
You allow yourself to take a day or two to be down in the dumps.
Cry if you have to, yell or scream into a pillow. Wallow in self pity.
Then get yourself up, put your big girl panties on, and let’s get to work.
Get your resume in order, make yourself sound AMAZING. This is NOT the time to be humble.
What to Tell Your Next Employer About Losing Your Job
Be upfront and honest from the get go.
Decide what you will say about your most recent job loss and practice your speech.
Absolutely do not trash your former employer or drudge up personality conflicts.
This says a ton about your personality and what you can bring to the table at a new company.
Be the bigger person. Either tell them you just weren’t a good fit for the position, the company decided to go in a different direction, or that your position was eliminated.
Describe the great things about the position you left, what you learned from your unemployment experience, and what you’re grateful for.
Be as positive as you can and you’ll win over any future employer!
You’ve got this, this is just a bump in the road!
Have you ever been unemployed with a family? What did you do to prepare? What advice would you give to others in the same position? Let me know in the comments!