You’ve been laid off. The dreaded day has come. The day that you feared but always hoped would never come.
You need to eat, bills are due, and rent needs to be paid. And you only have a small stash of savings.
You’re scared, and desperate, hoping to find a way to get back on your feet as soon as possible. Without a reliable job, how will you come up with enough money to stay afloat?
In this article, I’ll share five practical ways to protect your finances. While it may seem like it at the moment, being laid off doesn’t have to be the end of the world. It can actually be a blessing in disguise.
Take a Deep Breath
First things first, breathe. Take a deep breath, and try to relax. Clear your head, and let’s look at some options. Since you’ve been laid off, the number one goal is to reduce expenses, so your savings can take you further.
Here are some ways to do that.
5 Ways to Protect Your Finances
1 – Cut Down on Bills
There comes a point in everyone’s lives where the money is tight and you need to cut corners wherever possible. Cutting down on bills is a great way to lower your expenses and the perfect place to start.
Besides the usual, such as; switching off electronic devices, lights, air conditioning, and heaters (unless absolutely necessary) there are probably other bills you can eliminate entirely.
While utility bills probably can’t be eliminated, they can be significantly reduced.
Other non-essential services can be canceled entirely. For example, subscription services, like streaming platforms, such as Netflix, Amazon Prime, Disney +, and others. Canceling those three can save you nearly $100 a month.
While these subscription services aren’t much on their own, when combined, it can be quite a bit. Take a look at your credit card or bank statement to see if there are any non-essential services you can cancel.
You’ll also need to cut back on unnecessary spending as much as possible. Living a frugal lifestyle can be tough, but if it will help you get back on your feet sooner, it’s worth the struggle.
2 – Withdraw from 401K or Pension Plan
If you have been working for the same company for a while, they have probably been contributing to your 401K. Since you’ve been laid off and need some quick cash, withdrawing from your 401K is an option.
While you can withdraw from your 401K at any time, there are penalties for doing so, and you’ll also need to pay taxes on the amount withdrawn. In most cases, the penalty is 10% if you’re under the age of 59 and you’ll also need to pay around 20% income tax.
In 2020, due to the global pandemic, in the United States, several rules have relaxed regarding cashing out on your 401K, and the penalties aren’t as strict, sometimes even waived completely. It’s worth contacting your 401K provider to see what your options are.
3 – File for Unemployment
If you’re struggling to secure a job, filing for unemployment is a good idea. The unemployment insurance benefits vary from state to state, but it’s worth looking into, especially if you’ve been fired. As long as you meet the requirements, you can file a claim, and it should be reviewed in a couple of weeks.
The requirements aren’t usually very strict. You basically have to show you’ve been employed, and met a certain income requirement, but you lost your job due to reasons out of your control. Being laid off usually makes you elegible.
The process for filing for unemployment can be a little tricky and you’ll need to do an interview, but it’s a good place to start. Unemployment insurance can help you get back on your feet, especially since they’ll send a check every week.
4 – Make the Most of Your Severance Pay
If you’ve been laid off, there’s a good chance your employer will offer a severance package. The severance package will vary depending on how long you’ve worked at the company and many other factors. It might also be paid out in full, or in separate, weekly, payments.
In some cases, you can even negotiate for a severance package, and it’s recommended to do so. It seems like companies aren’t always legally required to give their employees a severance package.
They mainly do so to prevent the employees from talking negatively about them or other issues. Either way, it’s a good idea to discuss the matter with your company, it’s worth a shot, at least.
5 – Look for Alternative Income
When you’re broke, every dollar counts. There are lots of ways to make extra income to put towards essential bills. The best place to start is by selling unused items in your home.
Chances are there are lots of things in your home that you can sell on eBay, Facebook groups, or Craigslist, for some fast cash. Some ideas could be old phones, laptops, gaming consoles, appliances, and anything else that is functional.
Besides that, you could consider looking to earn money online. It’s easier said than done, but it’s possible, and platforms like PayPal make it easy to receive money from clients anywhere in the world.
If you have a particular skill, it’s worth looking for online jobs that are in your industry. Freelancing can be quite lucrative, once you find the right clients. What are you good at? For ideas, take a look at freelance service marketplaces like Upwork and Fiverr, even something as simple as writing articles can be a way to earn extra cash.
There’s also the option of earning “Beer Money” which is a coined term for pocket change that you can earn from various online platforms, such as survey websites, micro-tasks, and other offers.
The Bottom Line
Again, these won’t make you rich, and you should be wary of anyone who makes those promises, but when times are tough, a few extra dollars can be a big help.
Being laid off is painful and it’s never easy, but with the right mindset and some determination, you can get over it. There are lots of alternative ways to make some money here and there, at least until you can find another job.