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Even if you feel secure in your job, it’s still a good idea to make sure you’re financially prepared in the event you’re laid off.

By Shane Cummings, CFP®AIF®, Wealth Advisor & Director of Technology/Cybersecurity as featured in Kiplinger 

With all the changes in the world over the last several years, including an increase in layoffs as large companies look to rein in expenses, it is an important time for those of us still in our working years to review our financial situation in the event of a job loss or change.

This year, economic data has shown increased jobless claims, decreased job openings and slower wage growth. Even if you have a job and feel secure and comfortable right now, taking some time to review your personal balance sheet and do a temperature check is good financial housekeeping.

Here are some important items you can review now and regularly in the future.

Take Stock of Your Savings and Sources of Liquidity

I normally recommend having some cash savings set aside for my clients as an emergency fund.  The amount you need may vary from case to case and can vary from three months’ worth of expenses to 12.  If you are at the low end of that and don’t have any outstanding debt to pay down, you may want to consider moving that target from three to six months as an extra cushion, for example.

With high-yield cash savings rates being much higher than a year ago, you can earn a decent return on cash in the bank.  It’s not uncommon to find APY rates over 5% at competitive bank deposit programs that are also fully FDIC insured, like MaxMyInterest.

If you have investments in stocks or similar securities in a brokerage account, those can also be tapped if cash is needed suddenly, but remember that they could be subject to price swings if the market is more volatile than usual in the near future.

Focus on Debt Paydown

If you are carrying any long-term credit card debt or other loans and may be unable to make payments if your employment is unexpectedly impacted, then now is the time to determine if you can address the debt faster. Typically, credit card debt charges have significant interest rates (between 15% and 25%) and can be hard to escape if you are only able to make minimum payments.

If you have not done so already, start a spreadsheet of all your current debt by bank and note the interest rate on each. A good strategy is to allocate extra debt payments to the balances that have with the highest interest rates, since those are accruing interest at the highest rates.

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