The start of 2024 has already brought about news of layoffs across several industries, from finance to tech to media. And even though the economy is generally strong and unemployment is fairly low, the unfortunate reality is that your company could decide to cut its payroll costs at any time.
Being laid off can deal a huge blow to not just your outlook and self-esteem, but also your personal finances. So once a layoff happens, by all means, take a few days to sulk, 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’re able to find a new job in relatively short order.
That said, even if you’re only out of work temporarily, your finances might take a hit during a layoff. So if you’re coming off a period of being out of work, here are some essential moves that can help you bounce back.
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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, like home repairs, or to be able to pay your bills in the absence of a job. If you raided your savings account while you were out of work to cover your expenses, don’t feel bad about it. That’s what that money is there for.
However, once you’re employed again, do your best to trim your spending so you can put back the money you removed from your emergency fund. You don’t want to leave yourself vulnerable to debt in the event of another job-related hiccup or unanticipated expense.
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2. Tackle your credit card debt as quickly as possible
Recent SecureSave data found that 63% of Americans are unequipped to tackle a $500 emergency expense. So if you spent some time without a job, you may have landed in credit card debt as a result.
That’s understandable, even if it’s not fun. But if you’re working again, make paying off that debt a priority. The longer you let it linger, the more interest you’re apt to accrue. On the other hand, if you’re able to pay off that debt within the year, you may not lose all that much money to interest on a balance that’s pretty recent.
3. Use the gig economy to your advantage until you’re more financially secure
Trimming your spending is a good way to free up cash to rebuild your emergency savings or pay off debt. But there may only be so much spending you can cut. So once you’re settled into your new job, explore your options for taking on a side hustle through the gig economy.
Now in this situation, it’s probably best to take on a side gig that allows you to set your own hours. Your new work schedule may not be so predictable at first. And as a newbie, it’s important to show your employer that you’re willing to be flexible. As such, gigs like driving for a ride-hailing service or doing grocery delivery may be suitable for you.
Coping with a layoff isn’t easy. And even once you’re working again, there may be lingering financial damage from a period of unemployment. Do your best to build back your savings and dig out of your debt pile. And if turning to the gig economy is the best way to meet those goals, so be it.
In fact, you may decide to hang onto your side gig even once your emergency fund is replenished and you’re debt-free. That way, if you’re laid off again, you’ll at least have a backup income stream to rely on.
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