When you leave an employer, you’ll lose certain benefits. Make sure to understand what you’ve still got access to and what you need to add on your own.
Revisit your monthly budget and find ways to save until you find your next paycheck.
Try not to worry too much—if you’ve got a solid financial plan, it can adapt to whatever life throws at you.
If you’ve experienced a job loss, your mind is likely racing with questions: Did that really just happen? Is there anything I could have done differently? And—perhaps the most panic-inducing of them all—what should I do next?
First, take a deep breath. Though this may not have been in the plan, you’re likely going to be fine. But, there are a few things you can do in the days and weeks after you pack up your desk to make sure this minor setback doesn’t become a major one.
Here are six things to do (and not do) after losing your job.
1. Don’t worry too much
There’s no doubt you’re sidelined with anger and overwhelmed with stress. Acknowledge those feelings, but don’t let them get you down. After all, almost 4 percent of the population is unemployed at any given time, according to recent Bureau of Labor Statistics data, and this could be the incentive you needed to find a job that’s a better fit.
Though finding a new job is probably at the top of your to-do list, balance hours spent job searching with time catching up on self-care and wellness. Try to keep up with healthy routines like good sleep, exercise and spending time with friends. This can also be a great opportunity to dedicate time to boosting your professional skills by taking courses, adding certifications, taking exams or learning new skills. Also think about adding a new hobby, which can give you something to focus on other than finding a new job.
Whatever you do, try to keep a degree of normalcy as you navigate this transition—it'll keep you grounded as you figure out what’s next.
2. Take stock of your benefits
Losing your job means you’ll lose benefits that go with it—like health insurance. Currently health insurance is a requirement for all adults because of the Affordable Care Act, so finding coverage should be a top priority. See if you can be added to your partner’s plan, look into extending your benefits through COBRA or shop around on the health insurance marketplace for other types of health insurance. If you had an FSA through your employer, make sure you understand important deadlines like the last date to spend unused funds or submit claims.
If you have a 401(k), you’ll have to decide what to do with those funds. At this point, you really have three options: leave the account as is indefinitely, leave the account as is for now and roll the funds into a new 401(k) when you find a new job or roll the money into an IRA. It’s okay if you don’t take action on this right away—you may have a much better idea of what you want to do when you find a new employer and understand its benefit package.
If the only life insurance you had was through your employer, you’ll also want to evaluate whether to add independent coverage. (This is another good reason to carry insurance independently of your employer.) Look into independently adding coverage. If you’re looking for a more inexpensive option for death benefit coverage, term insurance may be a better fit until you’re able to budget for permanent life insurance.
3. Revisit your monthly budget
With less money coming in, you’ll want less money going out. Take a close look at your monthly budget and spending habits, and then have a family meeting to discuss areas to cut back. Could you live without that fancy cable package? Should you go out to dinner less? Discretionary expenses are a good place to start, and there may even be some fixed expenses you can reduce or cut for the time being. You don’t need to overhaul your entire lifestyle just yet, but see if there are simple adjustments you can make to keep money in your bank account. During the time that you’re out of work, it’s a good idea to revisit this exercise and review your spending regularly to make sure you’re staying where you need to be.
4. Find sources of cash
Hopefully you’ve got a healthy emergency fund reserve to draw on. As you budget, figure out how long you can make it last while looking for your next gig. If you work with a financial advisor, tell them about your situation so they can help you figure out ways to make your cash reserves last longer or keep debt to a minimum while you’re looking for work. Some places you may be able to find extra cash in the short-term include:
If you've lost your job, you could be eligible to receive a portion of your income for a set number of weeks from Department of Labor while you look for work. Getting unemployment checks can help you stress less about paying bills while you’re between jobs.
Apply as soon as you’re able, but keep in mind that not everyone qualifies. The Department of Labor says you must be unemployed as a result of circumstances beyond your control, such as company-wide layoffs (rather than bad behavior), and you need to be actively looking for a job. You also must meet your state’s requirements for the length of time worked or money earned. The requirements vary by state, but generally if you had a steady job and earned a full-time wage, you should be covered.
Cash value of a life insurance policy
If you’re really in need of cash, tapping into your retirement plan should be a last resort.
A Roth IRA is probably your best bet if you have one. Because you’ve already paid taxes on the money, you can withdraw your contributions without penalty. If you withdraw your earnings and you’re younger than 59½, you’ll need to pay the 10 percent early withdrawal policy on those earnings. To access any other retirement accounts, you’ll likely have to pay the 10 percent penalty in addition to income tax on the withdrawal. (For a traditional 401(k), this could result in receiving only 50 to 60 percent of your savings).
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5. Start the job search
The first step in trying to find your next role is updating your resume and your LinkedIn profile, or, if you’re not sure what you want your next job to be, email 10 friends and ask them what they think you’d be great at. Then go into put-yourself-out-there mode: Talk to people in your network to let them know you’re up for hire. You’ll likely get more leads from acquaintances than those in your close circle. Finally, know the process takes time. Pros say to expect the search to take one month for every $10,000 in salary.
6. Re-evaluate your goals
Though this break in employment may not have been planned, use it to be really strategic about your next step. Are you happy in your current industry, or is it time to try something new? How do you want to position yourself? What are you hoping to achieve professionally and personally?
Think bigger than your career too: What else do you want out of life? Are you taking the necessary steps to get there? Use this break to make sure you’re living the life you want and if you’re not, think about what you need to do to get there.
If getting there comes with an added price, a Northwestern Mutual financial advisor can talk you through how to make it work. A good financial plan has flexibility to adapt to whatever life throws at you, and an advisor can give you advice on how to fit your goals into your current (and future) financial situation.