Losing your job is no fun. I’ve been unemployed before, and it’s a difficult situation to find yourself in. My situation was a little different than many people who experience unemployment, as I was transitioning from an active duty military position and looking for a job in the civilian sector. Even though it was difficult to be out of work for six months, I felt as though I had an advantage when I entered into unemployment – I knew it was coming.
Now don’t get me wrong, being out of work for six months is tough – I wanted to work, but I couldn’t find a job. It takes an emotional toll on the person who is unemployed and in some cases, finding a job can be more difficult the longer you are out of work. Unfortunately, this situation is becoming more and more common.
There are thousands of books and articles out there about finding a job, and we’ve covered this topic a few times on our site. But one thing we haven’t covered in depth is preparing for unemployment, which we will do here. Not everyone has the luxury of knowing when they will lose their job, but many people actually do have the knowledge they will soon be out of work – and we want to help you prepare for that event. Whether your job is being downsized, your contract is about to end, or you are voluntarily leaving your position for something else, you need a plan.
What to Do When You Know You Will Lose Your Job
Every plan needs some organization, so let’s look at job loss in the order of how it affects us, and then decide the order in which we should address these issues: financially, professionally, and emotionally.
Financial effects of job loss
Your finances are the most important thing to consider when you know you will be losing your job – after all, the reason most people work is to earn money. And while unemployment benefits provide financial relief when you lose your job, most people aren’t able to live on unemployment benefits for long before their finances crumble.
The first thing to do is review your financial plan and budget. Your emergency fund will likely come into play while you are searching for a new job, so you should make it a priority to save as much money as you can over the next few months. Sometimes layoffs are announced several months in advance, and if you have several months to plan for your job transition, you may decide to discontinue making contributions to your 401k or other retirement plan so you can save money for your transitional period. Most people wouldn’t recommend no loner making retirement contributions, but it’s all about priorities: it doesn’t make sense to save money for retirement if it means you will go into debt while you are looking for a job.
You should also reevaluate your fixed expenses at this time. For example, go line by line through your budget and determine if there are any areas where you can cut back to save some money each month. Many people can easily trip $100 or $200 from their monthly expenses by making small sacrifices. You may also find it easier to refinance any loans while you are employed – this could be as big as refinancing your home, which can sometimes save hundreds of dollars per year in interest costs, or it could mean using 0% balance transfer credit cards to reduce your credit card interest rate to 0%, allowing you to save money on interest, lower your payments, and pay off your credit cards more quickly.
Professional effects of job loss
Finding your next job is just as important as getting your finances in order and these tips can help you prepare for an impending job loss.
Update your resume. Having an up to date resume will make it easier for you to start your job search without delay. It’s a good idea to update your resume at least every 6 months, or with any major change in job title, role, or each time you gain a new qualification.
Start your job search immediately. You don’t need to wait until you don’t have a job until you begin searching for a new one. In fact, sometimes the best time to find a job is when you already have one. It can also become increasingly more difficult to find a job the longer you are without one. Starting your search as soon as you know you will lose your current job can help you make the transition with little personal interruption and get you a leg up on the competition – especially if you will be part of a mass lay off in your industry or region and there will be a lot of competition for jobs.
Nurture your network. Your professional network can be an invaluable source of finding a new job if you suddenly find yourself without one. It’s a good idea to join professional associations, participate in trade shows and events, attend social functions, and otherwise get to know people inside your industry.
Continue your professional growth. One of the best ways to stand out in a crowded job market is by adding to your resume. Adding certifications, qualifications, or a new degree can help you rise above other job applicants.
Emotional effects of job loss
You can prepare financially and professionally for losing your job, but in my opinion, it is more difficult to prepare emotionally, especially if you are used to being the “go-to person” at your job. Even if you don’t associate your job with your identity, you may find it difficult to transition from a role of responsibility, to an undefined role. The biggest issue I had when I was unemployed was going from the responsibility I had in the military, to having no responsibility at all. And it was tough. My recommendation is to create a schedule for yourself and stick to it so that you maintain an order and discipline in your life, which will make it easier to get back into the swing of things when you do find your job. I found it helpful to get up every morning at the same time, work a few hours on searching for jobs and updating my resume for each position I was applying for. Other tips that might be helpful include volunteering, working a part time job, taking classes or working toward a certification, or attending job fairs and networking events. You can also use this time to start a small business or free-lancing career. The key is to remain proactive and positive.