Woman shaking hands with employer during job interview.
Learning that you’re losing your job through no fault of your own comes with one of the worst feelings in the world — helpless despair. I was laid off from my first paying job in the museum field, over a decade ago, and it immediately threw my finances into a tailspin. Despite receiving unemployment insurance, I was unable to afford the mortgage payments on the house I shouldn’t have bought, and I watched my credit score plummet as a result.
But alongside all the bad that comes with being laid off, you might find some silver linings. Here are a few ways losing your job can create a better financial situation for you going forward.
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You can get a better handle on your budget
Suddenly finding yourself without an income is a scary situation, and it’s likely that one of your first moves in the wake of it is to dig into your household expenses, to see what can be canceled or put on hold versus what must be paid regardless. If you were a bit lax about budgeting before, being laid off might be the kick you need to get a better handle on where your money goes every month. A streaming service here, rising internet costs there — if you haven’t explored your bills in depth lately, this is a good opportunity.
This is not to say that you must cut all the fun spending out of your budget forever (although, cutting back while you’re between jobs is a good idea) — that’s a terrible way to live and likely unsustainable. Personally, I appreciate being able to make frivolous purchases more when I know for sure that doing so isn’t going to harm my personal finances.
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You might prioritize emergency savings
In an ideal world, if you’ve been laid off, you’ve got an emergency fund to help you cover your bills until you can find gainful employment. But this is the real world — and according to SecureSave, 63% of U.S. employees couldn’t cover a $500 emergency out of their savings. If you’re among them, you’ll need to do whatever you can to cover your costs during your period of unemployment (I hope you’re collecting unemployment insurance or have received a severance package from your former employer).
Once you’re back on your feet, consider making emergency savings a higher priority for your finances — especially if you find yourself enjoying a higher salary in a new job. It can be hard to carve out money to save, so I recommend treating contributions to your savings account like a must-pay bill. You might also consider automating transfers from your checking account on payday — if you don’t have to remember to save, you won’t have the chance to forget.
You have the opportunity to advocate for your career — and salary
Sometimes, losing your job in a round of layoffs can be a blessing in disguise. If you disliked your job and wished for better, you might have struggled to follow through with polishing your resume and putting out feelers for new opportunities. Inertia can be hard to escape, after all. But having the job pulled out from under you means you have to take action. Once you’ve licked your wounds, you’ll need to reach out to your network, put an end date on your resume for the job you left, and look for something else.
While it’s likely better for your finances to get a new job sooner rather than later, I’d urge you to resist the impulse to just apply for everything under the sun in hopes of getting any job. Tailor your resume to the roles you actually want, and focus on making yourself the best candidate for those jobs.
And while you’re at it, find salary data for your field and roles within it (Glassdoor is a good place to look). As you start getting interviews, go into them knowing what salary is fair and reasonable given your experience — and don’t be afraid to advocate for yourself.
You may find motivation to start a business
If the job you left was increasingly sucking the joy out of your life, and you’ve been wondering about self-employment, a layoff can be a good excuse to explore your options here, too. Ideally, when you start a business, you have time to build a financial cushion ahead of time, perhaps by getting your enterprise off the ground while you’re still gainfully employed elsewhere. After a layoff, you don’t have this luxury. But if you were already saving money to begin something new, getting laid off might be just the push you needed.
Being laid off from your job is a traumatizing event, and you should take some time to come to terms with it before taking any action. But if you can use the opportunity to clean up your finances, recommit to saving for emergencies, and improve your working life via a better job or starting a new business, a world of good can eventually come from being laid off.
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