How to Prepare to Be Laid Off

by Kevin on December 15, 2011

Hearing the whispered rumors throughout your corporate campus that layoffs are coming is a terrifying experience. No one that has the facts — upper level management — is talking. Your departmental coworkers don’t know if the rumors are true or not, but everyone is scared. Could your department be skipped over and not lose anyone? Will the decision makers decide to do 5% cuts across the board or will they take an honest look at the business and make bigger cuts in areas that aren’t as productive?

If you find yourself in this uncertain and scary situation, don’t let your emotions freeze you from action. You need to take time to begin preparing to be laid off. Here’s some pointers.

Financially Prepare for a Lay Off

Preparing yourself to be laid off by your employer isn’t a fun task, but it is necessary. Even if the layoff rumors are not true — or if layoffs happen and miss you — the exercise of preparing for the unemployment line is beneficial to your financial situation. Knock out these four important tasks if you fear for your job.

Stop Spending

You need cash. Stop spending money on things you don’t need. You should treat your spending like you would if you had already lost your job. Get back to basics: utilities, food, and housing costs. Stop eating out and really cut back on any extra entertainment costs. Yes, it can make you feel discouraged to have to cut these things out of your life, but imagine how much more discouraged you would be if you didn’t stop that extra spending and then lose your job. You would likely rather want that cash on hand.

Stash Cash, Slow Payments

Hopefully you have built up an emergency fund for just this type of situation. Singles should have at least 6 months of living costs (those monthly utility, food, and housing costs) above saved up. Married couples should probably have 12 months of expenses saved up. As you are looking at ways to save cash you might consider paying off your credit card, but it depends on your situation as to whether this makes sense. I almost always want your credit card debt wiped out, but if you paid off a $10,000 balance with one check and then lose your job… you’re right back where you started. That extra cash would come handy in an emergency.

Whether or not you should cut out these extra payments depends on how seriously you believe the chances of getting laid off are and how strong your emergency fund is.

Update Your Resume

If rumors are swirling that your company is going to lose a lot of employees you should probably take some time to update your resume. It can be hard to remember what you’ve done over the past few years with your employer. This task is much harder if you are emotional after having just lost your job. Be sure to consistently update your resume every 6 months to make this process easier.

Build Your Network

Connect with as many of your trusted coworkers while you all still work at the same employer. Swap contact information, connect on LinkedIn, and grab lunch. Ideally you want to genuinely build up these relationships throughout your tenure so that if you do get cut, you have a strong work network to help you land on your feet. But even if you have to scramble toward the end to get your network back into shape, it is much better to do that than to wonder how to get in contact with someone after you have been laid off.

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