How to prepare for a layoff during a recession

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As many companies across the United States carry out mass layoffs and uncertainty grows in the US labor market, countless people may fear that these warning signs will impact their jobs. However, what everyone has the ability to do right now is prepare.

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In the event of a layoff, take the following steps to ensure your finances and health are protected, and prepare for the next steps in your career.

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Get your annual exams, now

If you have health insurance through your employer, do not delay in making an appointment with the doctor, the dentist and any other general practitioner.

Fo Alexander, CFEI and founder of Mama & Money, said that while you can expand your healthcare coverage through COBRA, it will come at a cost. If you know a layoff is imminent at your workplace, plan now to take care of annual reviews. Those with dependents should also make sure they pass their exams.

Maximize your HSA

Those with a Health Savings Account (HSA) will need to max out their plans, if possible. Alexander said that once you are no longer covered by a high-deductible plan, you will no longer be able to contribute to the HSA.

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“Having these funds can be very useful when you have to pay for medical expenses out of pocket. With this money already set aside, you won’t have to worry about additional medical bills,” Alexander said.

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Save money, reduce your expenses and pay your debts

Following a job loss, you will need money set aside to easily access your expenses. Continue to save money, build your emergency fund, and pay off any outstanding debt or reduce your expenses.

Danielle Miura, CFP and founder of Spark Financials, said that even if you plan to apply for and receive unemployment, it won’t replace your previous salary. In this time of uncertainty, you’ll want to focus on saving as much as possible. Review your budget and determine what unnecessary expenses can be cut or what debts can be paid off to mitigate your financial risk.

“If you expect to be laid off soon, make an effort to pay off your high-interest debts,” Miura said. “When your finances are tight, paying a high-interest loan will make it harder for you to pay it back.”

Use all company benefits

Generally, it is unlikely that a laid-off person will be able to access their employer’s benefits afterwards. In addition to seeing the doctor and maximizing your HSA, contribute as much as possible to your company’s 401(k) plan and get matching from your employer.

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Review your employer handbook

Do you know what will happen to your 401(k) plan if you are laid off? Is there a paid vacation payment (PTO) policy? Are you eligible for severance pay? If you don’t know the answers to these questions, Miura recommends that you read your employer’s handbook to better understand your company’s policy.

“Check to see if your company offers severance pay to those who are made redundant,” Miura said. “There is no obligation on the part of the employer to provide a severance pay policy, however, if they have a policy it will be helpful in planning your budget.”

Get ready for your next career opportunity

Finding your next job will require a combination of essentials, including an updated resume, support from your network, and a polished LinkedIn profile to land your next opportunity. Jump-start the job search to find the job that’s right for you with these recommendations from LinkedIn career expert Blair Heitmann.

  • Be the first in line. Heitmann said LinkedIn data shows you’re 4 times more likely to hear about a job if you apply within the first 10 minutes it’s posted on the site. Set up Job Alerts now to be notified as soon as a job offer matching your criteria is published. Then apply as soon as possible.
  • Send a signal to recruiters. “You can signal that you’re open to job opportunities by using the Open to Work feature on LinkedIn, which can be shown only to recruiters or more broadly so your community can help you,” Heitmann said. “Those using the #OpenToWork profile framework are on average 40% more likely to receive InMails from recruiters and 20% more likely to receive messages from the LinkedIn community.”
  • Work on your connections. If you see a job that interests you and you notice that one of your contacts works for that company, contact them and see if they can introduce you or place your application at the top of the list.

Additionally, Heitmann said it’s a good idea to know what you want in your job, especially where you want to work. Job seekers on LinkedIn can use search filters like hybrid and remote filters to find jobs that match their needs.

Increase revenue streams

“If you haven’t already, choose a side business that will bring you extra income,” Alexander said. “You want to make sure you have another source of income in case something happens with your main source of income.”

To breathe

Layoffs are stressful and overwhelming situations, but having an exit strategy in place can do wonders for providing peace of mind in the future. Career coach Ken Coleman advises people to approach their job like a flight attendant advises passengers: be prepared for an emergency and have a plan.

“Be humble and hungry,” Coleman said. “Breathe and see your situation as an opportunity.”

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