Money Management

Losing a job can be stressful, but there are steps you can take to manage the process. Here’s how to minimize the damage to your career and your bank balance. 

This year has already brought a number of headline-grabbing layoffs, particularly in the tech and banking industries. Economists may disagree about the likelihood of a recession, but that doesn’t help a lot if you’ve just lost your job. Here are some key steps to take if you’re in need of a new job.

1. Make a plan

Losing a job can be traumatic and stressful. Whatever the circumstances, a plan can help make things feel manageable. Think about both the short and long term. It’s OK if you don’t have all the answers. Even if you map out what you’re not sure of and plan how you’re going to learn more, that’s a good start. My plans often start with a list of questions and a timeline for answering them.

For example, you might be able to use a side hustle or part-time work to keep money coming in while you look for something more permanent. Or perhaps you want to make your side hustle into a main source of income. Now is a good time to consider whether you want to stay in the same industry, or move to something new. If you want to switch, do you need additional training or qualifications?

2. Reach out to your network

It can be tempting to hide your job loss and get through this situation on your own. Try to resist. Not only might friends and former colleagues know about other opportunities, they can also support you along the way. I regularly get asked for recommendations from people trying to hire. If I know someone’s looking for work, it is much easier to connect them with a job opportunity.

3. Take stock of your finances

If you don’t already have a budget, now’s a good time to make one. Look at how much you spend each month against any money you have coming in. Think about alternative sources of income, such as renting out a room or selling things you no longer use. Look through your bank statements from recent months or use a budgeting app to get a realistic picture of your spending.

If you have a budget, revisit it now that you won’t have a paycheck coming in. You might need to make some cuts in nonessential spending so you know you can cover housing, food, and utilities while you look for a new position. If you have debt payments to cover and aren’t sure how to manage, you might be able to talk to your lender to see if you can temporarily suspend payments or negotiate a lower rate.

If you have an emergency fund, now’s the time to use it. If you don’t have much cash in your savings account, don’t beat yourself up. Look at what funds are available and try to be realistic about how you’re going to keep on top of your expenses, ideally without taking on debt. If you’re being offered severance pay, factor this into your calculations.

4. Apply for unemployment

Depending on your situation, you may qualify for unemployment benefits, particularly if you lost your job through no fault of your own. Contact your local unemployment office to find out how things work in your state and what you need to do to apply. Bear in mind that some unemployment offices have a backlog of applications. The sooner you can get your application into the system, the better.

5. Decide what to do with your 401(k) and health insurance

If you had health insurance through your company, something called COBRA could mean you can continue on the same plan for the coming 18 months. However, you’ll need to pay the full premium so this might not be the best option. Shop around to find out what plan might work best for you. Also, talk to your HR department and find out when your coverage will end — you might still be able to schedule appointments before it does.

If your employer offered a 401(k) and you’ve been contributing, you have a few options. You can leave it where it is, roll it into an individual retirement account (IRA), or move it to your new employer’s plan (when you have a new position.) You can also cash it out, but this can prove costly if you’re not yet at retirement age. You don’t have to decide immediately, but keep it on your radar. There’s over $1.35 trillion in forgotten retirement accounts, and that’s cash that could help you in your old age.

6. Update your resume

Take some time to make sure your resume is up to date and reflects your skills in the best possible light. If you’re considering switching careers, think about what transferable skills you have and how you can present them. You might create one master copy of your resume and tailor it to individual applications.

Your resume is not the only place potential employers will find information about you. Work on your social media presence too — especially professional sites like LinkedIn. Be aware of what information you post (or have posted) on social media. If you don’t want a potential employer to see what you share with your friends and family, make your profile private. You could create a separate professional social media presence for work relationships.

Bottom line

Losing a job can be extremely unsettling, to put it mildly. Look for ways to minimize the damage to your bank account balance and professional progress. Remind yourself that job loss is part of modern working life and don’t be afraid to ask for help in your hunt for the next position.

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Being laid off by a huge company won’t necessarily guarantee you a severance package. Read on to learn more. 

In recent weeks, many consumers have been bemoaning the loss of their neighborhood Bed Bath & Beyond store. The company has been shuttering locations and laying off workers in light of its financial woes.

But recently laid-off workers were shocked to learn that they weren’t entitled to severance from Bed Bath & Beyond — even though workers who lost their jobs in earlier rounds of layoffs were eligible for a package. And that should serve as an unfortunate wakeup call to anyone who works for a large employer.

Severance isn’t always a given

Some states have laws in place stating that companies of a certain size must issue a warning to workers about mass layoffs prior to going through with them. In New Jersey, the rule is that businesses with more than 100 workers must give at least 90 days of notice for mass layoffs. Additionally, businesses of that size must offer severance equal to one week of pay per year of employment for workers who lose a job as part of a mass layoff.

But the laws regarding layoff notices and severance requirements vary by state. And they generally apply to mass layoff situations, which is different from a scenario where employees are let go on a one-off basis.

What this means is that working for a large company does not guarantee that you’ll be entitled to severance pay if you’re terminated through no fault of your own. And it’s important to save for that sort of situation so you aren’t left scrambling if your job is yanked away.

Make sure your emergency fund is solid

When you lose a job through no fault of your own, you’re generally entitled to unemployment benefits, even if you’re not eligible for severance. But those benefits will generally just replace a portion of your paycheck — and it may be a small one, depending on what your state’s maximum weekly unemployment benefit looks like.

That’s why it’s so important to maintain a solid emergency fund. Ideally, you should have enough money in your savings account to cover at least three full months of essential bills. That way, if you were to lose your job and not get severance, you’d have a way of covering your expenses while you look for work.

In a scenario where you’re laid off but not entitled to severance, a robust emergency fund could spell the difference between having to rack up costly credit card debt or remaining debt-free. So if you don’t have enough cash in the bank to pay for three months of bills, do what you can to build up some reserves as quickly as you can. This is an especially important thing to do if you’ve been hearing rumblings about potential layoffs at your company.

Unfortunately, severance pay is not always a given when you lose your job — even if you didn’t do anything to cause your termination. Rather than let yourself get caught off-guard, do what you can to build savings so you’re protected in that situation.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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Don’t want to pay for travel insurance? Read on to see how you can protect yourself while traveling without it. 

Taking a trip can be an expensive prospect. Not only might you have to pay for airfare, lodging, checked baggage, and food, but you might have to fork over some extra money to cover the cost of travel insurance.

Forbes Advisor says the average cost of travel insurance is 5% to 6% of your trip cost. So the more expensive your trip, the more you might spend to insure it.

The problem with travel insurance, though, is that it’s not always worth the money.

For one thing, some policies won’t let you just cancel for any reason, and you may even have a hard time canceling due to an illness. And policies that do allow you to cancel your itinerary for any reason often don’t give you all of your money back — just a portion of it, leaving you with a loss on your hands.

Now, you’ll often hear that it’s important to buy travel insurance in case you’re hurt or get sick in the course of your travels. But if you read the fine print, you may not get coverage depending on the activities you’re engaging in. For example, if you’re traveling and going rock-climbing, you may not be eligible for medical coverage because you were engaging in a riskier activity.

If you’ve reached the point where you no longer want to pay for travel insurance, it’s understandable. But you should still try to take steps to avoid financial losses when traveling. Here’s how to get some protection without buying insurance.

1. Use the right credit card

Some credit cards offer built-in protection for snags you might hit or losses you might bear in the course of your travels. This especially holds true if you book your itinerary using a travel rewards credit card. You may, depending on your card, be eligible for reimbursement if your luggage is lost, or if your plans are disrupted due to certain circumstances.

2. Book the right lodging

These days, a lot of people tend to favor private rentals over hotel rooms because they often make it easier to spread out at a comparable cost. But one benefit of booking a hotel room is that you can often cancel without penalty as long as you do so 48 to 72 hours before you’re scheduled to arrive.

Many of the private homes you might rent on a site like Airbnb don’t offer that same flexibility. Instead, you might have to cancel weeks or even months in advance to get your money back. So if you’re not going to buy travel insurance, you may want to stick to a hotel instead.

3. Buy flexible airline tickets

Refundable airline tickets commonly cost more than those that are non-refundable. But you also get the benefit of being able to pull the plug on a trip without bearing a financial loss. If the upcharge is reasonable, it could pay to book a refundable flight if you won’t have insurance as backup.

In some cases, it very much pays to get travel insurance, such as if you’re going abroad and want to make sure you’re covered in the event of a health emergency. But it may be easy enough for you to make the case to not buy travel insurance. And if so, you should at least do what you can to protect yourself financially in the absence of having a policy.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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