Is Your Family Facing a Layoff? Tips From Families Who’ve Survived One
by Reader Contributors
Are you or your spouse facing a potential layoff? We asked readers whose families have experienced a loss of income to share ways to prepare for such a situation. Whether for a layoff or any other financial challenge, these tips can help you better weather the storm.
No matter whether you’re a one income or dual income family, unless you have a sufficient amount tucked away in an emergency fund, a sudden loss of income can be downright scary.
It is one thing to mindfully put money away in preparation for a rainy day that may or may not ever come, and quite another when you can see the storm clouds on the horizon.
If a loss of income is a likely reality rather that a remote “someday” possibility for your family, there are things you can do to prepare that can help you better make it through until you have a regular source of income again. We asked our readers who have faced a layoff what things helped them get by until their income was restored.
Hopefully their tips and advice can help your family regardless of why your income gets reduced.
It Happened to Us
I work from home and bring in $200-$300 a month. When my husband’s company closed at the beginning of this year, they had given us warning. They paid him severance pay (1 week for each year he’d worked there) plus vacation pay he had coming. In all we had two month’s salary plus his unemployment to work with until he found another job.
One thing we did was immediately cut back unnecessary expenses – eating out, buying other than groceries and “have-to-have” things, clothes and other things that could wait till later. And we saved up as much as possible. We also checked into his 401(k) to see if we could take that out instead of rolling it over (don’t do this unless it becomes absolutely necessary – you’ll never save that money back up).
Look for odd jobs that either of you can do in your spare time (I took on babysitting my niece).
Another thing it forced me to do was check my rates on insurance, etc. and to decide what bills were unnecessary. (You can compare auto insurance rates here.) I changed my auto insurance to a company that charged me over $200 a year less and cancelled our cable (we were not under contract). I compared credit card companies to see what kind of deals I could get on balance transfers and not only lowered some interest rates, but it didn’t hurt so much when I could only make the minimum payment.
We made it through the layoff, and he ended up with a job he likes making $2 an hour more than he was before. Sometimes that push out of your comfort zone is what you need to make your life better.
Related: 12 Ways To Cut Spending to the Bone
Prepare for a Layoff: Get a Head Start
To prepare for a layoff, you may want to consider several of the following:
Look into the benefits of the person potentially getting laid off. Is there vacation or personal time that will be paid? Will there be receive severance pay? If vacation time will be paid, save it. Use all of your medical benefits now if you’ll be losing those. Have all routine check-ups, dental work, etc. done now before that insurance runs out. Be prepared now, so that you won’t have to scramble for information during an unemployment panic.
Begin to stock up on nonperishable groceries. If it’s on sale and you have a coupon – buy it. You will probably need it later. (See A Grocery Stockpiling Guide: How and When to Save.)
Consider paying your bills one month ahead. In lean times, you can take a month’s vacation from your payments and not get behind.
Go through closets, attic, and basement for all the junk you’ve been meaning to get rid of. Have a garage sale or sell online. Better to do it now, than when you are desperate.
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A Time to Try New Things
My husband was laid off after almost 14 years with a Fortune 500 company after they merged with another biggie company. They did give him a nice severance pay, so this has helped a lot. We also, of course, signed up for unemployment right away.
We went on a “bare bones” budget and bought nothing but necessities. I went online and looked up everything I could find on frugal, simple living and ended up with a lot of helpful tips and encouragement that we could get through these lean times.
Don’t turn a layoff into a divorce. We worked together as a team most of the time, and our marriage grew stronger.
We also started a small part-time business. We already were avid yard salers, so we looked for valuables to sell on eBay and started a profitable little business for ourselves, without leaving home to do most of the work.
We had no debt other than our mortgage at the time of layoff, so obviously this was a big help in keeping our costs down to essentials. (See A Time To Prioritize Savings Over Debt Repayment.)
Try new recipes, since cooking from scratch is cheapest. Good meals helps keep you from feeling poor and food is one place where you can save a lot of money without lowering your standard of living. Good luck and work hard and you will all survive. Keep to essentials for now. Things will get better, even if they seem bleak now.
Prepare for a Layoff: Steps to Take Now
My husband has a job that has seasonal pay. I am a stay at home mom. Some things I would consider:
If you need any medical work done, get it completed as quickly as possible while you still have insurance.
Take stock of your monthly budget needs and see where you can begin to pare down now. A very simple place to start may be the grocery budget. Buy items on sale and freeze or store on extra shelves if you have space. Plan a menu based on using meat as little as possible – think casseroles. Cook at home as much as possible. Drink water instead of milk or juice at least one meal a day. Cut back on eating out. (See When Your Food Budget Is Critical.)
In other areas – purchase any clothing your children may need through garage sales or a second hand shop now. Don’t wait until the lay off. Or find a friend who has children a size or two ahead of your children. Make sure cars are in decent repair now. Buy the cheaper gas now.
If your children are old enough, sit down with them and you and your husband can share with them what may be coming up. They need to have realistic expectations of money issues. They do not need to know all the details but things will go smoother if they know ahead of time. (See When to Involve Children in Family Finances: Parents Weigh In.)
Cindy of Norwalk, Ohio
Related: Make Frugality a Family Affair
Start NOW by ‘pretending’ that the layoff has happened. Cut out every expense possible except food (buy only what you will actually eat, and no eating out!), and bills that have to be paid every month.
Also, only make minimum payments on monthly bills – you can catch up once your income resumes.
And have you thought about babysitting in your home? Or doing some other side gig that can bring in some extra cash?
Reviewed April 2023
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