As we know, COVID has put intense stress on individuals and business owners. Right now, we are seeing widespread unemployment, worsening economic conditions, rising risks of bankruptcies, stock market volatility, and a steeper economic contraction than what was experienced in 2008. It’s also made a lot of us reflect on what is truly important or necessary and how we can put ourselves in better positions and stable footing as we move forward.
As states in the U.S. push to reopen, that absolutely doesn't mean business as usual. Businesses will have to find new ways to navigate social distancing, safety issues, cash flow concerns, and fearful employees and customers. Many businesses will be operating at reduced capacity and will need to limit overhead expenses in order to continue to be viable in years to come. Some businesses will shut down entirely. It's going to be a very difficult road to re-open for millions. So, with that in mind...
What can you do if your job is uncertain or you've been laid off?
Focus On Your Personal Economy
The hardest part about having a financial plan is implementing it and then sticking to it when the world around you is in chaos and doesn't care about your plan AT ALL. If you’ve been laid off or had your hours reduced due to the Coronavirus pandemic, you’re not alone in this struggle, though it may feel like it some days. There are loads of people going through the grief of losing a job just as you may be right now. A sudden job loss is traumatic and it takes time to recover mentally, emotionally and financially. It is very easy to be distracted by the world around us in disarray and a little more difficult to focus on what matters most to you, but let's start with thinking about your personal health and financial well being. With that in mind, the following is a financial survival checklist of things to do if you are facing potential lay offs (or have already been laid off).
1) Revisit Your Emergency Fund
If you know ahead of time that lay offs are even a remote a possibility, I urge you to build up your emergency reserves while you're still employed. It's just a good practice, generally speaking, to set aside 6 months of your expenses in ordinary times and it has proven to be crucial when unexpected events (like say, a natural disaster or global pandemic) occur. Every dollar counts, so even if you can't save 6 months of personal expenses, start with trying to set aside one month and build from there.... I can hear you saying, "Ok, but I'm already laid off. What do I do NOW?"
2) File for Unemployment STAT.
If you haven't done so yet, file for unemployment immediately. While you might think your circumstances won’t qualify you for benefits, the Department of Labor announced guidance for states around flexibility to offer unemployment insurance to workers impacted. For example, states may pay benefits in situations where an employer temporarily closed due to COVID-19, an employee is quarantined but intends to return to work or if you had to leave work temporarily due to care for a family member. When you file, remember to set withholding to cover tax on the benefits you'll receive so you're not hit with a tax burden next year. You might also note that when you file for unemployment, there are job search boards directly on the site for your benefit.
3) Identify Income Sources & Expenses
Identify possible income sources including spousal income, severance pay, unemployment benefits (keeping in mind that the current supplement to unemployment benefits won’t be there forever, so the unemployment income amounts will significantly reduce in the future). Determine what immediate bills are due and contact your mortgage company, creditors, student loan vendors, etc to see what flexibility they can offer at this time. Prioritize your expenses to see if there is anything you can cut back on at this time versus what your essential expenses are.
4) Update Your Status on Social Media
There are no casual coffees right now in most places, so you need to make sure your digital presence is up to date and active. Update your profiles on Facebook, LinkedIn & Twitter. You may even consider creating a personal website that highlights your resume. Sites may also offer "virtual" networking opportunities or job boards. You can sign up for job notification emails from job search websites and employers you're interested in. You can reach out to professional colleagues and friends to let them know you are going through a job search.
5) Make Sure You Get Copies of Your Financial Statements
Obtain copies of retirement plan paperwork, including 401(k), pension and stock options, from your employer's Human Resources department. Consult a tax professional and an experienced, fiduciary financial advisor before making any decisions about dipping into your retirement funds. You need to consider any tax implications of receiving payments, rollovers, distributions, etc. When you meet with your advisor, you need to discuss short term cash needs and balance those with any long term financial goals to see what is manageable now and how that will impact what is important to you in the future. Discuss your many options for your retirement plans, drawbacks and important considerations.
6) Review Your Health Benefits
If you're no longer covered, consider switching to a spouse's health insurance coverage if that's an option or enrolling in the healthcare market place, extending your employer coverage or buying private coverage. For any of your insurance coverage options (life, health, disability, etc), determine if there are provisions that allow for waivers of monthly premiums during times of job loss. You will need to contact your service providers to determine what provisions they may offer.
7) Review Your Life Insurance
Many people have life insurance coverage through work. If you’re no longer employed, that coverage often doesn’t go with you. Evaluate your liabilities, income replacement needs, final expenses, and desire to fund children’s education (LIFE assessment) to determine proper life insurance coverage amount. You can also take this time to evaluate any current insurance coverage and review cost, coverage amounts to see if you can save money on any older policies. See if any current policies have provisions that waive premiums during periods of unemployment.
8) Ask for a Reference Letter
If parting from your employer was amicable, you should ask for a reference letter from immediate supervisors or your boss. Speak with co-workers about writing you reference letters. You could also take this time to reach out to those you know in your industry to inquire about job opportunities.
9) Ask Your Employer If They Provide Any Outplacement Services
Some employers may actually assist you with resume writing, connections to other employers in your industry, professional organizations, career coaches, counseling, etc.
10) Professional Training or Career Change?
Consider taking any additional professional training or educational opportunities that could assist you in finding a new job or advancing your career. Or, take some time to evaluate if you want to stay in the same career versus early retirement (if that's an option) or the feasibility of pursuing your own business or contract work.
Change will come, always. And when change arrives, there are going to be obvious winners and some people that will feel like they’ve lost. That’s the nature of change. There will be businesses that hold steady and get through this and a lot of businesses that don't. Focus on your personal economy and make sure you have contingency plans in place. With proper planning and focused, informed decision making, your setbacks will lead to a graceful comeback and you'll be surprised by exciting things that happen along your journey.