Losing a job can be an emotional time. It’s overwhelming to think through the financial impact, not to mention the steps you need to take to find a new job. Reports indicate over 500,000 people lost their jobs in 2015, so it’s likely if you’ve not been directly impacted by the loss of a job, you know someone who has.
A typical first question many ask is, ‘What should I do first after losing my job?’ There are so many things to focus on, but the first and most important step is to allow time and space to feel the loss of your job. “Losing your job is a loss. Don’t underplay that. Take some time to properly grieve your job loss; just don’t get lost in the grief. There is a point when you realize that you are in your situation and that you need to get out of it,” says hiring expert Jen Teague.
Once you’ve moved past that grief, you’ll be ready to take action on the following steps more effectively.
File for Unemployment
Filing for unemployment is the first thing you should do after losing your job. You never know how long it’ll take you to find a new job, and you want to be financially prepared for the worst. According to a 2014 Rutgers study, it takes nearly 40% of laid-off individuals seven months to find a new job. It may take several weeks for your unemployment paperwork to be processed, so it benefits you to file as soon as possible.
Just don’t rest on unemployment. It goes without saying that you want to get out there and look for a new job. Do things such as:
- Attend networking events
- Tell friends and family members you’re looking for a new job
- Update your LinkedIn profile
- Update your resume
There may be other things you’ll want to do, but this will help you hit the ground running in your search for a new job.
Get Serious About Your Finances
Finances play a significant role in unemployment. You likely won’t know how long it will take to land a new job so you must allocate your money wisely to help cover that uncertainty. In all likelihood, you will need to slash your expenses way back. Anything non-essential needs to be looked at seriously. This can include such things as:
- Cell phone plans
- Eating out
- Subscriptions you don’t use
- Negotiate lower car insurance/homeowner’s insurance costs
- Negotiate lower rates on any outstanding consumer debt
Find ways to cut or greatly reduce those expenses and put them back into your savings to help you cover essential needs. Don’t just look at monthly items either; look at the entire year. “When you lose your job, it’s important to sit down and determine all the things you spend money on throughout the year. A lot of people budget monthly, but then non-monthly expenses come up and blow their budget,” says Rachel Jimenez, business strategist at Talk Raw. If you can pare the savings with finding opportunities to make money on the side, it can double your efforts.
Stop Saving for Retirement
Saving for retirement is a necessity. However, it may not make sense to do so while unemployed. Being unemployed is an emergency, and financial efforts should be focused on carrying you through to the end of finding a new job. Putting money away for retirement can hinder that, especially if you must pull funds out a few months later and incur fees and taxes.
If you plan to continue to save for retirement, consider doing so in a Roth IRA as you can pull out contributions tax-free if you end up needing the funds.
Find out How it Impacts Your Benefits
Losing benefits may be just as significant as losing your paycheck. You likely had health insurance, group life insurance, a 401(k) plan and more through your employer. It’s important to determine when and what you’ll lose once leaving your job. “Being laid off doesn’t mean that the company snatches everything from you at once. Most companies have a separation package that either clearly stipulates the terms of a separation or provides guidance on what is negotiable. Make sure you’re aware of the company’s standard policies and previous practices so you get a fair deal,” says Fred Mouawad, CEO at TaskWorld.
Reach out to your human resources department to learn how your benefits will be impacted. They can provide information on options like COBRA and whether or not your group life insurance is portable. If it’s not, it makes sense to look for term life coverage so that even once you do find a new job, you’re not entirely dependent on group coverage.
Depending on where you live you may have access to certain financial programs that can help you through this trying time. Take advantage of them as they’re there to help. Such programs range from utilities assistance programs, mortgage assistance and more. In fact, the government offers mortgage assistance for unemployed individuals to help provide some breathing room.
Again, such programs vary based on where you live and have different requirements, but it makes sense to seek aid and take advantage of the assistance available to you.
Losing a job is never fun. Allow yourself time to deal with the emotional impact, then tackle some of these steps to keep yourself afloat while you search for a new job.