If you’re laid off from your job, take a breath and get organized. Follow these seven steps to get back on your financial feet.
One day you’re elbow deep in a work project, but the next morning your manager delivers the dreaded words: We have to let you go. In other words, you’re being laid off from work. It’s always difficult to lose your job unexpectedly, but you’ll get through it. There’s a bear market looming and you won’t be the only one. Take a breath, give yourself a few moments (or days) to process, and then open up your laptop and get organized.
Everything you need to know about being laid off
Companies usually resort to layoffs when they can’t satisfy their financial obligations. Sales may be down or maybe the business model just didn’t make sense. No matter what your company’s particular malaise, getting laid off from work is stressful. You’re worried about money, paying your bills, and how to find your next job. Let’s tackle the ins and outs.
What’s the difference between being laid off and fired?
Big difference. Huge. When you get laid off, it’s because there’s a problem at your company. To save money, your employer may need to reduce staffing, or they may shift focus from personnel in one department to another. Typically, with layoffs, a group of employees are let go and, if the company has resources, they offer some financial support. In contrast, if you’re fired, it’s because of an individual issue, such as performance or a poor demonstration of character. Simply put, when you get fired, you lose your job because you messed up. When you’re laid off, it’s because your company made missteps.
What to do after getting laid off
For most people, being laid off from work comes as a shock. You might feel angry or embarrassed, and that’s normal, but remember, this isn’t your fault. Talk to your co-workers, family and friends, and get the support you need. Then sit down and list what you need to do.
Check on severance pay
At many companies, when employees are laid off, the company offers money to help bridge the gap until you can find your next job. Sometimes, they’ll pay your regular salary for several weeks or months, or they might offer a lump sum. Your severance might be based on how long you’ve worked at the company. Unfortunately, severance pay isn’t guaranteed. If your employer doesn’t have the funds to pay out severance, you might walk away empty-handed.
Create a budget
Once you know if you’ll get severance pay or not, it’s time to create a new budget. Even with a generous severance package, the money will eventually run out, so you need to be prepared. Open up a spreadsheet and make a list of your monthly expenses. Some of your financial obligations are fixed, including rent, utilities, and student loan payments, but others are discretionary. Layoffs or not, with the economy sputtering, It’s wise to financially prepare for a bear market. To save money, cancel your streaming plans and gym memberships, and give up those $16 Sweetgreen salads.
Get a layoff letter
We know the difference between getting fired and laid off, but some people don’t. To help with your job search, ask HR or your manager for a letter stating that you’ve been an exemplary employee and that you were laid off for company reasons. With the economy sputtering, a recession could affect banking and other industries and result in layoffs, so it’s good to be prepared. That way, if you need to sway any future employer, you’ll have that document in hand.
Sort out your healthcare
If you received health insurance through your employer, you may be entitled to extend your coverage for a period of time. Under the Consolidated Omnibus Budget Reconciliation Act (COBRA), if you’re laid off from work, you can continue your health coverage for a period until you obtain new insurance, but you’re responsible for up to 102% of the premium cost. COBRA can be expensive, but it’s a way to maintain health insurance. If you’re very lucky, your employer may offer to pay for a portion of your health insurance for a period. Talk to HR to understand your options.
Register for unemployment
With unemployment benefits, you’ll need to do your homework. Benefits and qualifications vary by state. If you live in New York City, your experience will be different than your college roommate’s in California or your cousin’s in Atlanta. Ask your HR rep for information and register with your state’s unemployment website. Gather your documents and don’t delay—it can take a few weeks or more to start collecting unemployment. Depending on your circumstances, you may even be able to collect unemployment while you’re receiving severance.
Check for company benefits
Some companies try to help their employees get back on their feet. If your former employer offers benefits and services, take advantage of them. Some firms extend counseling to their laid off workers, while others offer free professional support services. When I was laid off from a previous job, my company offered professional coaching, allowing me to polish my resume and work on my interview skills at no cost.
Roll over your 401(k)
If you’ve invested in your company’s retirement savings plan, also known as a 401(k), well done. It’s a smart way to invest your money. When you get laid off from work, it can also be confusing. It’s best to check with your HR department about how you will process your retirement account. In some cases, you can leave the money right where it is, while others require you to move it elsewhere. Don’t forget about it! That way, even if you’re laid off, you’re still planning for retirement.
Get ready for your next chapter
Many of us have been where you are right now. It stings, but it will improve. You’ve worked hard to start your career and advance, and those efforts will pay off in your next gig. Once you’ve worked through the steps after getting laid off, network, update your resume, hit LinkedIn, and start your job search. You’ve got this.