The start of 2024 has already brought news of layoffs in many industries, from finance to technology to media. And even though the economy is generally strong and unemployment relatively low, the unfortunate reality is that your company could decide to cut payroll costs at any time.
Getting fired can deal a huge blow to not only your outlook and self-esteem, but also your personal finances. So once a layoff happens, by all means, take a few days to whine, cry, and blow off steam. But then, dust off your resume and start networking. If you put yourself out there, you may find that you can find a new job in relatively short order.
That said, even if you are temporarily out of work, your finances may be affected during the layoff. So if you ever hit a period of unemployment, here are some important steps to help you get back on your feet.
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1. Rebuild your emergency fund
The purpose of having an emergency fund is to be in a position to cover unplanned expenses, such as home repairs, or to pay your bills if you are out of work. If you’re raiding your savings account while you’re away from work to pay for your expenses, don’t feel bad about it. That’s money.
However, once you start working again, do your best to cut back on your spending so that you can put back the money you took out of your emergency fund. You don’t want to leave yourself vulnerable to debt if there’s another work-related hiccup or unexpected expense.
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2. Deal with your credit card debt as soon as possible
Recent SecureSave data found that 63% of Americans are ill-equipped to deal with a $500 emergency expense. So if you spend a long time without a job, you probably have credit card debt as a result.
That’s understandable, even if it’s not fun. But if you’re working again, make paying off debt a priority. The longer you make it last, the more interest you will earn. On the other hand, if you pay off that loan within the year, you won’t lose all that much money in interest on a balance that’s still new.
3. Use the gig economy to your advantage until you are more financially secure
Cutting back on your spending is a great way to free up money to rebuild your emergency savings or pay off debt. But there may be more expenses you can cut. So once you’re settled into your new job, explore your options for taking on a side hustle in the gig economy.
Now in this situation, it might be best to join a side gig that allows you to set your own hours. Your new work schedule may not be very predictable at first. And as a newbie, it’s important to show your employer that you’re willing to be flexible. That said, gigs like driving for a ride-hailing service or grocery delivery might suit you.
Coping with a layoff isn’t easy. And even if you’re working again, there may be lingering financial damage from a period of unemployment. Do your best to recover your savings and get rid of your debt pile. And if turning to the gig economy is the best way to achieve those goals, so be it.
In fact, you may decide to stick with your side gig even after your emergency fund is full and you’re debt free. That way, if you get laid off again, you’ll at least have a backup income stream to rely on.
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