The worst has happened. Whether their fault, your fault or nobodies fault, you lost your job. We don’t want to make a bad situation even worse by making big financial mistakes. This is what to do after a job loss so you can stay or get back on your feet quickly.
We have all probably suffered a job loss at some point so we know how scary it can be. But there are lots of things you can do to mitigate the damage.
Listen to the show every Monday, for free:
Preparing for a Job Loss
Sometimes you can see the writing on the wall. Whether you’ve been slacking off at a job, you hate and know the ax is about to fall, or the company is showing signs of distress so dire that you can see it’s about to go under, sometimes you know you are about to lose your job. This is how to prepare for the inevitable.
This is exactly what an emergency fund is for. If you don’t have one, or your’s is a little skimpy, start beefing it up. Before the end comes, you want to have two to six months of expenses saved up, depending on how confident you are in your job prospects.
If you are going to save a few months worth in addition to your current emergency fund or are starting from scratch, don’t invest that money.
Because the need to dip into your emergency fund is rare and it’s a big chunk of cash, we recommend, although not without some controversy, that you invest your emergency fund somewhere like Betterment.
It’s too much money to have sitting in a low yield checking, or savings account for years on end.
But you are going to need to live off this money in the very near future so it needs to be somewhere readily accessible which means your checking account since you will be paying bills and other everyday expenses with it.
Even if you are thrilled and secure in your job, you should update your resume once a year. You never know what opportunity might cross your path and you want to be ready for it.
If you have recently completed a big project, update your resume to include it while it’s fresh on your mind.
Keep your LinkedIn profile updated as well. And while you’re at it, ask for LinkedIn recommendations from the people at your job (or past positions) who think you’re fantastic.
It’s always painful to ask but just do it, most people will agree and may even ask you to do one for them which makes the whole process feel less needy.
Nearly all potential employers are going to Google you and what they find might be embarrassing. If you have a Google account, you can control what comes up under your name if you control the content. If you do not control the content, you may still be able to have it removed.
Know Your Worth
Understand your worth in the job market. You can use sites like Glassdoor and PayScale to see how much others in similar jobs and similar locations are being paid. Take a look at Indeed to see how many openings there are for your job.
There is no downside to being an in-demand person.Tweet This
If there is not a lot of demand for what you currently do, you may need to learn some new skills that are in demand. This doesn’t mean you have to go back to college or spend a ton of money. There are a lot of free or low-cost sites that will teach you new skills like Udemy and Coursera.
After the Loss
Okay, now it’s happened. You are officially unemployed. These are your next steps.
You Need a (New) Budget
Welcome to your new normal. That means no more frivolous expenses like expensive gym memberships, dinners out, making it rain at the bar on a Friday night and anything else that costs money you no longer have in your budget.
This is a wartime budget. Cut it to the bone, even if you are confident that you will get a new, even better paying job than the one you lost. Never spend money you haven’t earned yet. Go to Mint and see what you can cut. And believe me, you can cut a lot.
Take responsibility, even if you feel 100 percent blameless for your job loss, approach the situation like it was your fault. Think critically about why it happened. If it was your performance, then write down some takeaways.
What can you do better in your next job?
How can you address your shortcoming now, when you have all this time on your hands. This might be painful but painful situations give us an opportunity to learn and grow and improve.
If the company or your boss was the reason for the job loss, you could learn lessons from that too. Were there early warning signs you missed or ignored regarding the health of the company?
If your boss was hard to deal with, well, some people are. How can you more effectively deal with difficult personalities?
Something to learn for all life situations, not just your work life!
Try it and See
Are You a Gambler?
It’s a Process
Looking for a job is your new job, so you need to put processes in place to make that easier. Take a leaf from Tesla’s page, focus on the machine that builds the machine.
Craft a resume and cover letter that is easy to customize for each job you apply to. It would be great if we only had to create one resume and one cover letter that we could send out en masse, but that isn’t how it works.
If you don’t start with documents that are easy to customize, you are going to waste a lot of time and effort tinkering with them to suit each opportunity.
Keep a spreadsheet of jobs that you want to apply to and update it each time you do apply. Include follow up information for each job and then make sure you do follow up.
Hiring managers get hundreds and even thousands of resumes, so the onus is on you to follow up.
Looking for a job is just like dating, it’s a numbers game, and you might have to kiss a lot of frogs before you find a prince or princess.
Bring Some In
The same reason we tell you to have an emergency fund is why we tell you to have a side hustle. No one should only have a single source of income. Your second (or third or fourth) source doesn’t have to bring in loads of money, but again, something is better than nothing during a job loss.
Be wary of part-time work though unless it is flexible, you don’t want to compromise your time for a crummy job you are going to ditch the moment something better comes along.
Something like Uber is ideal because you can set your own hours. If you have taken our sage advice and had a side hustle already, who knows? This might be your opportunity to take it to the next level. Maybe you won’t even have to find a new job!
The entire reason LMM exists is that being prepared for a job loss and future income problems was Andrew’s personal obsession. And it’s been his full-time job for more than a year.
You’ve Got the Time!
I’m not unemployed but I work from home full time which is less than forty hours a week, and I can tell you that one of the best aspects of it is having more time for my health.
When I was working, I was pretty good about exercising and eating well, but things are so much better now!
I can only work out in the morning; I just know that I won’t do it at the end of the day. And that was no problem because I like getting up early but I still only had time to lift weights or run on the days I worked, not both.
But now I do have time for both, it’s great. I have also started doing yoga daily and other weird health stuff like using a netti pot (which has seriously improved my running because I can breath more deeply) dry brushing, and oil pulling.
I always managed to have a good breakfast and lunch, but sometimes when I got home from the office, I didn’t have anything prepared and was too hungry to prepare something so I went out to dinner. Definitely, no hardship in New Orleans but gumbo and jambalaya are not exactly Paleo.
So use this time you have to do things that are good for you and don’t forget to do things you enjoy (that are free or cheap).
Go to the park at 1:00 on a beautiful day when everyone else is stuck in their cube, go to the museum, take your dog to the dog park to play with the other puppies.
These things are not only enjoyable but they get you out of the house and among the living again which is important, because a job loss can be depressing and isolating.
Get our best money lessons:
It Won’t Last
We know a job loss is scary, but if you prepare for it before and tackle the situation strategically after, you will be okay. Even the smartest and most hardworking among us have been in this position. The job loss has happened, it’s what you do now that matters. Good luck.