How to Prepare for Job Loss
Will a potential recession mean mass layoffs? Learn how to prepare financially and recover if the worst happens and you lose your job.
Three ways to prepare for potential job loss:
1. Always stay marketable
To prepare for possible job loss, you’ll want to stay marketable—this can help you find another job quickly. One of the best ways to do that is to refresh your LinkedIn profile, get new certificates in your field and keep networking. Don’t be complacent about your skills.
In addition, polish up your resume, make sure you have fresh references, and reach out to old bosses or colleagues where you worked to see if there are opportunities in their networks.
2. Create an emergency fund or get a line of credit
Have an emergency fund to cover at least three months of expenses. Make sure it’s in cash and not invested, so it’s accessible. And consider also getting a line of credit from a bank with the goal to never use it. Let it sit at zero. It is a safety net to be used only when absolutely needed, like if you are unemployed for longer than you want.
Of course, use debt carefully. It’s never a good idea to go into debt, but if it’s a crisis like a job loss, and if you are confident, you can get employed again, it can be all the difference between covering your bills or not. If you do incur debt while you’re between jobs, plan to pay it off as soon as possible once you’re employed again.
3. Reposition your debt
Look at your debt and consider what would happen should you lose your job. If you do become unemployed, your savings can get eaten up fast, so you may want to minimize your debt payments for a while. Also, avoid relying on your credit cards, because the interest rates are extremely high (typically 20% for purchases, and even higher for cash withdrawals). If that does happen, look into a balance transfer credit card with a lower interest rate. Other options include consolidating debt with a line of credit for a lower interest rate. If you have a mortgage, you could try negotiating with your lender to stretch out payments and temporarily reduce your payments on other debts to just paying the interest payment.
It’s always better to be safe than sorry when preparing for layoffs
Job loss is not uncommon, even without the upheavals going on today, and the threat of a recession. Planning ahead will help avoid a job loss turning into a disaster. If you keep your skills up to date and stay on top of your finances, you’ll have a better chance of coming out stronger on the other side, and hopefully with a better job.
The Virtual Resource Room at Calgary Career Hub is the best place to learn everything about job search and prepare for whatever the next step may be in your career journey. Click this link and get your password: Virtual Resource Centre
This Tip created with some content from: Kurt Rosentreter, senior financial advisor at Manulife.