{"id":363,"date":"2022-09-12T12:00:00","date_gmt":"2022-09-12T12:00:00","guid":{"rendered":"https:\/\/moneywithkatie.com\/prepare-for-losing-job-how-to\/"},"modified":"2025-08-29T16:36:53","modified_gmt":"2025-08-29T16:36:53","slug":"prepare-for-losing-job-how-to","status":"publish","type":"post","link":"https:\/\/moneywithkatie.com\/prepare-for-losing-job-how-to\/","title":{"rendered":"5 Financial Steps to Take if You Fear You May Lose Your Job in 2025"},"content":{"rendered":"
\n

Until the global panorama, it didn\u2019t occur to me that you could just\u2026lose your job for no reason (and by no reason, I mean, layoffs, budget cuts, projects ending, etc.). But when the world changed overnight, it became obvious to me how little<\/em> control we all really have over our own employment\u2014and I was like, Oh, shit, you mean when your company starts bleeding money there\u2019s a chance they\u2019ll cut you loose? Well, that ain\u2019t good.<\/em><\/p>\n<\/div>\n

\n
>
\n \u201c<\/span>While this is likely a fear that everyone with gainful employment experiences, I\u2019d postulate it\u2019s more intense in the US, where your healthcare, retirement savings, and ability to pay for childcare are all tied to your employer.\u201d<\/span>\n <\/p><\/blockquote>\n<\/figure>\n
\n

And ever since then, I\u2019ve lived with this undercurrent of fear that\u2014at any moment\u2014something in the economy could shift dramatically and leave me without a paycheck. While this is likely a fear that everyone with gainful employment experiences, I\u2019d postulate it\u2019s more intense in the US, where your healthcare, retirement savings, and ability to pay for childcare are all tied to your employer<\/em>. It\u2019s a high-stakes arrangement, right? That\u2019s enough to induce fear in anyone<\/em>, regardless of how good you are at your job. <\/p>\n

So whether you\u2019ve recently lost your job (or fear that you may for some reason), I wanted to put together a bit of a thought exercise: How to rationally approach a serious, scary situation to lessen the financial and<\/em> emotional toll I imagine it takes. <\/p>\n<\/div>\n

\n
\n

First things first\u2014let\u2019s usher the elephant out of the room<\/h2>\n

Yes, you are likely aware that you should already be searching for gainful employment elsewhere. We\u2019re not really going to focus on the new job search\u2014just the financial<\/em> checkboxes you can start ticking off if you\u2019re stressed about job loss in any capacity. <\/p>\n

And on that note, I apologize if any of this feels obvious to some of you, but I figured it made sense to round all of our bases and leave no stone unturned. Analogies abound.<\/p>\n

For the purposes of this post, we\u2019re going to assume there\u2019s no juicy severance package or short- or long-term disability pay associated with the job loss\u2014we\u2019re assuming that for whatever reason, you\u2019ve found yourself without the income you can typically rely on. <\/p>\n

That means the first thing you should do is look into applying for unemployment benefits in your state<\/strong>. This was a life raft during the pandemic when unemployment benefits were increased, but if you\u2019re looking around at your savings coffers while doing these exercises and you\u2019re only seeing cobwebs, it makes sense to apply for unemployment. Of course, there\u2019s no guarantee you\u2019ll get it, but it\u2019s there for a reason\u2014and you can get it even if<\/em> you were let go with a severance package. Your tax dollars fund it. Use it!<\/p>\n<\/div>\n

\n
\n

Step 1<\/strong>: Analyze your environment. <\/h2>\n

That\u2019s a fancy way of saying: Figure out what you\u2019ve got<\/strong>. Do a little inventory of your balance sheet and nail down a few numbers, primarily: How much do you have in cash readily available to you? <\/em><\/p>\n

This is probably going to be in checking and savings accounts, but it also might be cash that\u2019s earmarked for things like emergencies, weddings, home improvement projects\u2026and it can feel sketchy to start dipping into funds that were supposed to be<\/em> for something else. I would note that you have it on your imaginary inventory list, but add caveats wherever savings were already dedicated to something else, and think of those as \u201clast resort\u201d options if absolutely necessary.<\/p>\n<\/div>\n

\n
>
\n \u201c<\/span>In anticipation of (or immediately after) job loss, we\u2019re taking stock of what we have in cash already, and where, and if there\u2019s any other income coming in, and how much.\u00a0\u201d<\/span>\n <\/p><\/blockquote>\n<\/figure>\n
\n

The other part of this analysis is figuring out what else you\u2019ve got coming in.<\/strong> If you\u2019re part of a partnership with combined (or pseudo-combined) finances, losing one<\/em> job may not mean it\u2019s all-hands-on-deck panic time. Same goes for if you\u2019ve got side hustle income that can help eat up some of your impending expenses. <\/p>\n

On that note, a goal to strive for if you\u2019re in a couple:<\/strong> The best way to insulate yourselves from job loss and compensation downturns is to live on one post-tax salary<\/em>, and ideally, the lower salary. Why? Because even the higher-paying job is lost, there wouldn\u2019t be a disruption in spending. That\u2019s not always easy, though; for transparency, my husband and I are only about two-thirds of the way there in our own home. <\/p>\n

To summarize, in anticipation of (or immediately after) job loss, we\u2019re taking stock of (a) what we have in cash already, and where, and (b) if there\u2019s any other income coming in, and how much. <\/p>\n<\/div>\n

\n
\n

Step 2<\/strong>: Calculate your runway.<\/h2>\n

This is where all the badgering I\u2019ve done over the years to try to get you to figure out \u201chow much your life costs<\/span><\/a>\u201d comes into play. We need to figure out how much heavy lifting our cash on hand needs to do (after all, if you\u2019ve got side hustle income or another earner in your home who can cover some or all of the costs, you may not need to use much of your savings at all). <\/p>\n

We want to calculate how many months we have based on our current<\/em> spending patterns. This mostly includes things that cannot be easily \u201cbehavior-changed\u201d away\u2014your rent or mortgage, utility bills, basic groceries, doctor\u2019s appointments\u2026stuff that\u2019s more or less necessary even if you\u2019re playing life on \u201cAusterity Mode.\u201d <\/p>\n

For those of us with the privilege of discretionary income, I\u2019d venture a guess that not all<\/em> of your spending every month is necessary, which brings me to step 3\u2026<\/p>\n<\/div>\n

\n
\n

Step 3<\/strong>: Identify the costs we can cut.<\/h2>\n

When I think through our joint budget of $7,500 per month, there are a few major areas I recognize right away as opportunities to trim with reckless abandon:<\/p>\n