Unemployment figures go up and down. But the statistic that matters most to you is your own, and if you’ve been laid off or your company has gone under, you’re competing with an army of others for the few available jobs. Still, this difficult period doesn’t have to be a financial or personal disaster. Manage your financial affairs carefully while you’re out of work and you’ll survive the economic crisis. You might even emerge in better shape than you were before.
Eight ways to triumph. No single approach will work for everyone, of course, but these eight suggestions could help you overcome an unexpected pink slip.
1. Don’t panic. It’s normal to be nervous if you’ve suddenly been sent packing after years of gainful employment. But now’s the time to take stock of your situation as calmly as possible. Pull out all of your account statements, apply for unemployment benefits, and look for ways to keep your finances under control while you hunt for another job.
2. Reduce spending. You need to keep up with your mortgage payments and put food on the table. But there are likely to be some discretionary purchases you could reduce or eliminate for the time being. Poring over your budget and finding things you can do without may also help you overcome the feeling of powerlessness that often comes with unemployment.
3. Eliminate unnecessary debt. Cut up your credit cards? Maybe not, because you’ll still need to buy essentials, and using plastic can serve as a quick emergency borrowing source. But charge only what you can afford to pay each month. Otherwise, a small debt could quickly spiral out of control.
4. Take advantage of benefits. Getting unemployment compensation is much easier than it used to be; in many states, you can avoid those dispiriting visits to the unemployment office and apply for benefits by mail or online. Meanwhile, double-check the amount of severance you should be receiving from your ex-employer, and consider continuing your health insurance coverage under COBRA. Also, look into coverage under your spouse’s health insurance plan if it’s more economical than COBRA or if you’re still out of work when the nine-month COBRA provision expires.
5. Network, network, network. Applying for jobs posted online or in the newspaper pits you against a host of other applicants. You’re likely to have much better luck if you use personal and professional contacts to find viable opportunities. Be casual about reaching out to friends, family, and business associates—you don’t want to seem desperate—but be sure they know you’re job hunting. Also, attend as many networking events as possible, via professional associations or chambers of commerce for example.
6. Consider a career change. If your industry or profession seems unlikely to rebound, you might broaden your search to include related fields. For example, the skills of a journalist who loses a job in the print media might easily translate to work on a website, in public relations, or in another job requiring writing and editing. If former colleagues have made a similar leap, ask how they did it. Also consider taking courses that will develop your skills in related fields and potentially result in a certificate or advanced degree.
7. Start a new business. You won’t have to look far to find people who tell you that losing a job was the best thing that ever happened to them. If you’ve always dreamed of turning a hobby or other passion into a profitable business, this might give you the push you need to go for it. Sure, these are uncertain times for new ventures, but if you can fill a niche with high-quality services or products, you’ll stand a good chance of success. Plus, you can potentially minimize your overhead costs if your new business venture is Internet-based.
8. Stay positive. Be prepared for an extended job search that may sap the energy you had when you were first laid off. These are extraordinarily trying times, and finding the right position could take many months. But perseverance will pay off. And remember: If you’re middle-aged or near retirement, your wealth of experience is an asset, not a liability.
Finally, in a pinch, you may need to tap your retirement plans and other resources to weather the storm. But that really should be a last resort. Money you pull out now will be difficult to recoup later and brings unwanted tax penalties and fees.
This article was written by a professional financial journalist for Advisor Products and is not intended as legal or investment advice.
The U.S. economy has been much stronger than expected in 2023. As measured by gross domestic product, the U.S. is growing even though residential housing construction, a key driver of previous U.S. expansions, has been in a slump.