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Changing Jobs
Preparing to Weather the Storm
Many of us are living as close as “one paycheck from the street,” as the saying goes. How about you? If you were laid off tomorrow, could you make ends meet, and if so, for how long? If you don't know the answer, you could be in trouble.
In today’s economy, no one is safe from job loss. Since life is so unpredictable, a little pre-planning will go a long way to keep you from financial disaster. And while dwelling on the thought of unemployment probably isn’t your first choice of pastimes, the time to prepare is now while you have a steady income.
How Stable is Your Job?
Start by considering how stable your job is. Here are some indicators of job stability. These can give you a feel for the labor market around you.
- What’s the job forecast for positions in your field or industry? Are they growing, holding fast or losing ground?
- How are your employer’s competitors doing, and how is your employer doing in comparison to the competition?
- Are there layoffs in your work place or in your job class?
If the outlook is grim, for any reason, and especially if your workplace has already had lay-offs, it’s time to think about updating your resume.
What’s Your Employer’s Severance Policy?
If you are lucky, your employer will have a severance package for you. Your severance package can help bridge the gap between income and expenses while you are in between jobs.
Find out if your employer has a severance policy and if you’d be eligible to receive severance.
Calculate the amount of severance you would receive if you were laid off tomorrow. How much would you receive and when? Would you be paid for unused vacation time?
Find out if the severance package includes job placement services and what your health insurance options would be. Federal law requires that you can continue your health insurance, but the cost can be quite high.
Once you determine what your severance package is, you’re in a better position to be realistic when calculating an emergency fund to cover your living expenses.
Set Up a Budget
A budget provides the framework for tracking your income and expenses. From this information, you can develop a spending plan that will keep your finances on track.
Once you establish a budget that you can comfortably stick to, calculate how much you must save for your emergency fund. Developing a budget can take several weeks, as unforeseen expenses crop up, and one time quarterly or yearly expenditures. You'll need to reassess your budget to accommodate them. But once you have a budget in place, you minimize the chances of nasty surprises. There are popular software packages available in stores that make budgeting easier.
Set Up and Then Beef Up an Emergency Fund
We know you’ve heard it before, but we’re going to tell you again. You must have an emergency fund to get you through until you find another job. But how much is enough?
Many financial professionals recommend that you have at least three to six months of living expenses in a liquid (easily accessible) account such as a money market fund or passbook savings. While that amount is the rule of thumb, your individual situation will dictate the amount right for your family.
If you don’t have an emergency fund reserve, consider saving now while you still have a job! You still have incoming paychecks and the luxury of time you need to plan for unforeseen emergencies.
If you’ve changed jobs and need help with your options, call us today at 1-888-681-3153.
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