Layoffs are becoming very common nowadays worldwide. This undesirable phenomenon doesn’t affect only the US or developed countries. As a matter of fact, layoffs are threatening families and individuals worldwide for a number of reasons ranging from adoption of modern technologies such as Artificial Intelligence to economic downturns, armed conflicts and lack of demand for certain products and services.
Unfortunately, layoffs can strike all of us without any warnings or prior notices.
If you read news, it would be amply clear that gigantic corporations such as Google, Facebook and Amazon, to name a few, have resorted to layoffs for some or the other reasons. There’re layoffs at smaller organizations too but these barely draw attention since these companies aren’t listed on the stock market or such news doesn’t affect their shareholdings and stock prices, among other elements.
As I mentioned earlier, a layoff could strike anyone without prior warning. There could situations when your employer doesn’t even provide a mandatory notice but instead, opts to pay for the notice period and severance. In such a scenario, you could find yourself jobless overnight.
Problems Caused by Layoffs
Layoffs cause joblessness. It affects humans like you and me and our families too. What was once a happy, flourishing household could be plunged into sorrow and financial problems at the flash of a second, since the time you get a notice or email stating your services have been laid-off.
Some of the major problems caused by layoffs include:
- Shortage of money, unless you’re financially prepared.
- Higher availability of skilled personnel in the job market leading to lower demand for your services.
- Overall drop in median salaries due to easy availability of skilled manpower.
- Need to curtail expenses to fit within a budget.
- Stress on savings if any.
- Disruption, sometimes permanent, of any long-term plans for self and family.
- Overall drop in quality of life.
- Anxiety, stress, depression leading to poor physical health.
As we can see, none of these effects of layoffs are desirable. However, with some grit and planning, you could easily stave off these evil effects of layoffs and continue enjoying life as before. Yes, there’re ways and means to turn the tables on your employer when they lay you off.
How to do that? Continue reading.
Financial Planning for Layoffs
A layoff doesn’t really occur suddenly, as it might outwardly appear. In fact, undercurrents of an impending layoff can be felt much earlier- at least several months before they begin. Some of the symptoms of an imminent layoff include freeze in fresh hiring and salary hikes, abandoning recruitment for key positions, unusual attrition of higher-level employees and drop in company’s overall activities.
These symptoms imply that your employer is preparing to trim the size of its operations, usually permanently or is facing a closure of the business for whatever the reasons.
Should you encounter any of these symptoms or occurrences at workplace, start financial planning for a layoff immediately.
Here’re some of the best steps to take for financial preparedness to buffer a layoff.
1. Start Freelancing
Yes. Freelancing is the first and possibly the best step to take to fully counter and buffer any adverse financial impacts that it might bring upon the family and you. As a matter of fact, freelancers in the US are known to earn much more- almost thrice- the income of their office going counterparts. You needn’t enter freelancing on fulltime basis because you won’t have the time while working for an employer. However, the income can be stashed away and the skills you acquire would definitely prove handy to migrate to fulltime freelancing whenever the layoff strikes- with or without ample notice.
Also Read:
- Top 25 Freelance Jobs Opportunities to Earn from Home
- 28 Best Freelance Websites for All Type of Freelance Work
- 30 Best Online Freelance Writing Jobs Pays $20-$30 per Hour
2. Side Gigs
For those not possessing skills to work from home and freelance, side gigs provide a superb opportunity to defend against financial problems arising from layoffs. There’re countless side gigs available in the US and you could select any of these according to your convenience, skills and time you wish to work. Task Rabbit and Gig Walker are two apps where you can easily find such gigs both online and offline. Additionally, cab aggregators including Uber and Lyft, online stores including Amazon and delivery apps like Postmates also provide superb side gigs with excellent, assured income. In fact, some such side gigs could earn you much more than your traditional salary.
- Looking for Side Gigs – 12 Best Micro Jobs to Make an Extra $500 a Month
- 10 Creative Side Hustles to Earn Extra Money in 2025
3. High Interest Loans
Paying off high interest loans is the best step to take when preparing for a layoff. That’s because you’ll require every cent and dollar when the income from a job stops. Understandably, under American laws you’re entitled to severance pay from the employer. However, this is a one-off payment and won’t last a lifetime. Therefore, tackle all high interest loans the moment you get a whiff of any impending layoffs. Use the Snowball or Avalanche methods to eliminate these loan and credits. Usually, credit cards are the ones that attract the greatest interest or Annual Percentage Rate (APR) on outstanding balances. Wipe off these first.
4. Emergency Fund
Create an emergency fund much before any layoffs actually begin. In fact, I encourage you to create an emergency fund the moment you start working. This emergency fund can safely see you through a period of unemployment, if utilized carefully. An emergency fund should ideally have enough money for your family and you to live by maintaining the same lifestyle for at least six months, with a few compromises on certain frivolous expenses and unwanted spending such as dining out, partying or expensive gifting. An emergency fund’s importance was amply highlighted during the Covid-19 pandemic that triggered massive layoffs across the US and the globe. Those with a superb emergency fund could sail through the period before securing new jobs.
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5. Review Household Budget
An impending layoff is wakeup call to review your household budget. Shockingly, most households in the US don’t even have a proper budget: they simply spend whenever an expense arises and save what’s left at the end of the month. This is wrong. Instead, draw a proper budget if you don’t have one. This helps review and eliminate unwanted expenses. Find out and cancel subscriptions that’re seldom used or lying unutilized. Find ways and means to trim expenses on household stuff by resorting to using discount coupons, shopping during sale and buying in bulk where possible.
Also Read:
- Creating and Managing Budgets Using AI: A Guide for Women to Save and Track Expenses
- How to Eat Healthy on a Budget? Top
- Best Budgeting Apps for Couples in 2024
Wrap Up
These five measures could definitely provide a superb buffer against any financial woes that you would encounter after layoff. At the same time, strive to find another job, either by reskilling or acquiring new skills that’re in demand and would pay. Countering a layoff is easy if you also know the unemployment benefits from the Federal or state government and can maximize them to your advantage.
Olivia Carter is a versatile freelancer with expertise in finance-related writing, content creation, and consulting. With a Bachelor's degree in Business Administration and a focus on Finance, Olivia brings a fresh perspective. Her adaptable writing style blends professionalism with approachability, engaging diverse audiences. Olivia explores personal finance, fintech trends, and enjoys literature and mindfulness.
