Layoffs are becoming increasingly common worldwide. This unpleasant phenomenon affects more than just. In truth, layoffs endanger families and individuals all over the world for a variety of reasons, including the adoption of new technology such as artificial intelligence, economic downturns, military conflicts, and a lack of demand for specific products and services.
Unfortunately, layoffs can strike any of us without warning or prior notice.
If you read the news, it’s evident that massive firms like Google, Facebook, and Amazon, to mention a few, have resorted to layoffs for various reasons. Layoffs at smaller organizations also occur, but they receive little notice because these companies are not publicly traded, and such news has no impact on their shareholdings and stock prices, among other factors.
As mentioned earlier, a layoff can occur without notice to anyone. There may be times when your employer does not issue a mandatory notice and instead chooses to pay for the notice period and severance. In such a case, you may find yourself jobless overnight.
Problems Caused by Layoffs
Layoffs result in joblessness. It affects humans such as you and me, as well as our families. What was once a happy, flourishing household can be thrown into misery and financial issues in the blink of an eye, as soon as you receive a notification or email informing you that your services have been terminated.
Some of the major problems caused by layoffs include:
- A shortage of money, unless you are financially prepared.
- Increased availability of skilled workers in the job market, resulting in lesser demand for your services.
- Overall, median salaries have decreased due to the abundance of competent labor.
- To stay on budget, spending must be reduced.
- If you have some savings, focus on them.
- Any long-term plans for oneself or one’s family may be impacted, perhaps permanently.
- Overall, there is a reduction in quality of life.
- Anxiety, stress, and depression cause poor physical health.
As we can see, none of the effects of layoffs are positive. However, with some grit and planning, you may simply avoid the negative impacts of layoffs and continue to enjoy life as usual. Yes, there are methods to turn the tables on your company if they lay you off.
How do you do that? Continue reading.
Financial Plan for Layoffs
A layoff is not as sudden as it may appear. In reality, the undercurrents of an imminent layoff can be detected considerably earlier-—at least several months before it occurs. Some signs of an impending layoff include a halt in new hiring and compensation increases, abandoning recruitment for critical positions, unexpected turnover of higher-level personnel, and a decline in general company activity.
These symptoms indicate that your employer is prepared to reduce the size of its activities, usually permanently, or is considering closing the business for whatever reason.
If you see any of these symptoms or incidents at work, begin financial planning for a layoff immediately.
Here are some of the greatest things you can do to prepare financially for a layoff.
1. Start Freelancing
Yes. Freelancing is the first, and possibly the greatest, move to take to offset and protect against any adverse financial effects for your family and yourself.
Freelancers in the United States are known to earn nearly three times as much as their office colleagues. You do not need to start freelancing full-time because you will not have time while working for a company.
However, the revenue can be saved, and the skills you gain will undoubtedly help you transition to full-time freelancing whenever the layoff occurs, with or without warning.
2. Side Gigs
For people who cannot work from home or are freelancing, side gigs are an excellent way to protect against financial troubles caused by layoffs. There are many side gigs accessible in the United States, and you can choose any of them according to your availability, talents, and preferred working hours.
Task Rabbit and GigWalker are two apps that might help you discover such gigs online and offline. Additionally, cab aggregators such as Uber and Lyft, online businesses like Amazon, and delivery applications such as Postmates also offer fantastic side gigs with a steady income. Several of these side gigs could pay you far more than your regular payment.
3. High-interest loans
Paying out high-interest loans is the greatest way to prepare for a layoff. That is because when your job income stops, you will need every cent and dollar. Understandably, under American law, you are entitled to severance money from your employment.
However, this is a one-time payment and will not last a lifetime. As a result, address all high-interest loans as soon as you learn of any planned layoffs.
To erase these loans and credits, use either the snowball or avalanche procedures. Typically, credit cards charge the highest interest, or annual percentage rate (APR), on outstanding amounts. Wipe these first.
4. Review Household Budget
A potential layoff serves as a wake-up call to review your home budget. Surprisingly, most households in the United States do not even have a proper budget; they simply spend when an expense arises and save what remains at the end of each month.
This is incorrect. If you don’t already have a budget, create one. This helps to examine and minimize unnecessary spending. Find and cancel subscriptions that are rarely used or unutilized.
Find ways to save money on household items by using discount coupons, shopping during sales, and buying in bulk when available.
5. Emergency Fund
Make an emergency reserve far before any layoffs begin. I recommend that you develop an emergency fund as soon as you start working. If used properly, this emergency fund can safely get you through a time of unemployment.
An emergency fund should ideally include enough money for your family and you to continue the same lifestyle for at least six months, with a few concessions on frivolous and unnecessary expenditures such as dining out, partying, or extravagant gifting.
The need for an emergency fund was underscored during the COVID-19 epidemic, which resulted in significant layoffs in the United States and around the world. Those with a sizable emergency fund may be able to get by until they find new work.
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Conclusion:
These five methods could serve as an excellent buffer against any financial difficulties that may arise as a result of a layoff. At the same time, look for another work, either by reskilling or learning new skills that are in demand and will pay. Countering a layoff is simple if you are aware of and can take advantage of federal or state unemployment benefits.
