Losing a job can leave you unsure of the next steps. But there are ways to save money and mitigate damage while you look for a new job.
A healthy emergency fund is critical during unemployment. Ideally, you’ll already have 3-6 months' worth of essential living expenses to get you through the search for a new job. If you don’t have one yet, don’t panic. This Coach can help you find areas in your budget that you can trim to help get some extra funds and start saving for the future.
Unemployment insurance is a program that provides temporary financial aid to those who are unemployed through no fault of their own. It can be a great way to help you get by if you are in a rough spot financially while looking for a new job. Checking your eligibility for unemployment insurance is simple. You can apply at your local unemployment agency office or through their website. Remember that the rules and the amount of income you are eligible for vary from state to state. Once approved, your benefits will last until you find a new job or the insurance expires. Typically, unemployment benefits are 26 weeks, but they may be extended during widespread unemployment. Please note that any income received through unemployment is considered taxable.
There could be other government programs that can help your current situation. To learn more, check out this article about government benefits.
Severance pay is…If not mentioned in your employment contract, your employer may not be obligated to pay you severance (termination pay). However, some employers do provide severance pay. If your supervisor does not discuss this with you, check with your company's human resources department about their policies.
Severance pay is not standardized across companies. Some companies base severance on years of service, offering one week of pay for each year of work, while others provide a flat four weeks of pay. Moreover, some companies consider other factors while making the decision. In addition, all employees are not treated equally, so you may need to negotiate a fair settlement. Many state unemployment agency websites have severance calculators that can assist you in determining a reasonable starting point.
When you agree to take a severance package from your employer, they commonly ask you to sign a legal document that releases them from any claims you may have against them. It's advisable to review this document with a legal advisor before signing it so that you fully comprehend all the implications.
If you took part in a retirement savings plan provided by your employer, you are required to state your preference on how you handle your plan assets. You have full ownership of your contributions and any earnings resulting from them. Still, the vesting schedule set by your employer determines whether you also own the contributions made by your employer to your plan.
You may have the option to leave assets in the plan, and you can always move them into an IRA.
COBRA health insurance is a lifeline for people who have lost their jobs. It allows them to continue their existing health insurance plan, although they will be responsible for paying the full premium. This is particularly valuable as it allows them to maintain their current healthcare providers and services without interruption.
COBRA can be expensive, but it's important for those with pre-existing conditions. You have 60 days to elect coverage after a job loss. Quick decision-making ensures no lapse in healthcare coverage.
Before you pack up your desk, consider asking your employer for:
- A detailed reference letter
- Information about severance pay
- Details on the continuation of benefits, such as COBRA
- Assistance with job placement or outplacement services
- Information on any unused vacation or sick pay
- Details on your 401(k), pension plan, or any other retirement benefits
- Clarification on how your departure will be communicated internally and externally
You should change your budget as you plan your next move. It may be a good idea to cut down on non-essential expenses and prioritize necessities until you secure your next job.
Finding your next job can be challenging. If you’re feeling overwhelmed and unsure about where to begin, it could be helpful to explore some of the options available to you:
- Updating and refining your resume
- Networking with industry professionals on platforms like LinkedIn
- Registering with job search websites and setting up job alerts
- Attending career fairs and networking events
- Exploring further education or professional development courses
- Seeking career counseling or coaching services
- Researching companies you're interested in and reaching out for informational interviews
- Considering freelance, part-time, or temporary work to build experience
- Exploring internships or volunteer opportunities in your field of interest
Proactively managing a job loss can open new opportunities. It can take a lot of work, but the more active you are, the easier it will be until you find your next job.
Neither Banzai nor its sponsoring partners make any warranties or representations as to the accuracy, applicability, completeness, or suitability for any particular purpose of the information contained herein. Banzai and its sponsoring partners expressly disclaim any liability arising from the use or misuse of these materials and, by visiting this site, you agree to release Banzai and its sponsoring partners from any such liability. Do not rely upon the information provided in this content when making decisions regarding financial or legal matters without first consulting with a qualified, licensed professional.