The start of 2024 seems to be a positive time from an economic standpoint. Not only did the U.S. economy add 353,000 jobs in January — a number that blew past analysts’ expectations — but the jobless rate held steady at 3.7%. In fact, the unemployment rate has remained at under 4% for roughly two years now, which is something workers today can certainly take comfort in.
But while economic conditions seem favorable on the labor market front, the reality is that it’s possible to get laid off even when the economy is doing well, or even when your company is doing well. So while there’s no particular need to lose sleep over a potential layoff in general, it’s always a good idea to be prepared for the loss of your job. Here’s how you can set yourself up to survive a layoff should that end up being your fate.
1. Build or bolster your emergency fund
When you lose your job, you generally lose the paycheck that comes with it (in some cases, you may be eligible for a severance package that replaces your income for a period). And without a paycheck, it’s pretty difficult to pay your bills.
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That’s why it’s so important to have a solid emergency fund. Without cash in your savings account, you might end up having to resort to debt to pay for things like rent or groceries.
Ideally, your emergency fund should have enough money to cover three months of essential bills at a minimum. If you’re starting with pretty much no savings, don’t expect to accumulate a fully loaded emergency fund in months. It might take years — but start by saving some amount of money each month and do the best you can.
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If you’re laid off, a $1,500 savings balance may not last you very long. But you’re certainly better off having $1,500 than no money in savings at all.
2. Boost your job skills
Being great at what you do won’t necessarily prevent you from losing your job. But it could make it easier to find a new one.
Think about the skills you’re currently lacking and make a plan to boost them. You may, for example, ask to shadow a colleague who’s been in the industry for a while so you can learn from them. Or there may be a low-cost online course you can take that allows you to build knowledge.
3. Try to eliminate high-interest debt
The loss of your job could constitute a huge financial blow. And the last thing you need when you’ve lost your paycheck is a monthly credit card payment to make. If you’re able to pay down your credit card debt, or any other high-interest loan you might have, you’ll be better off for it — whether you end up losing your job or not.
Of course, your emergency fund should take priority over paying off debt — without savings, you run the risk of adding to your debt. But once you have ample cash reserves in the bank, try to tackle your debt as best as you can.
Although the economy is in a good place, things could, at some point, take a turn for the worse. Or your employer could simply decide it wants to cut corners and eliminate your position. That’s why it’s so important to be layoff-ready at all times. And you can do so by building savings, growing your skills, and shedding costly debt so it’s not hanging over your head.
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